ISLAMABAD: The Federal Board of Revenue (FBR) is seriously considering a budget proposal of fruit drinks and juice industry to abolish or reduce five percent Federal Excise Duty (FED) on juices in the coming budget (2020-2021).
Sources told Business Recorder here on Thursday that the budget markers of the FBR were considering relief to various industries in the coming budget.
In this regard, the FBR is reviewing budget proposals of different companies for the next fiscal year.
According to the proposal of the industry, currently this industry has an annual turnover of Rs45 billion.
These fruit juices and drinks are popular among the youth and are optimized to suit their healthy lifestyle.
According to regulations (such as Punjab Food Authority), fruit drinks have minimum eight percent fruit content, nectars have 25-
50 percent fruit content, and pure juices have 100 percent fruit content.
In fact, fruit drinks, juices and flavored milks are
promoted as healthier options by food authorities across the country for consumption in schools and colleges.
The juices industry is playing an integral role in the fruit growing value chain of Pakistan.
The industry works closely with the farming community and prevents significant wastage of over ripe fruits.
Fruits and farm produce are wasted or sold at very low prices during peak seasons due to inadequate storage facilities and lack of effective processing or preservation techniques, leading to high wastage levels.
Furthermore, this industry is working closely with the farmer community for their uplift and prosperity, by buying and using surplus quantities of fruits such as mango, kinnow, apple, guava, etc in large quantity.
Last year, the juice industry procured 100,000 tons of mango for conversion into pulp from local farmers, hence positively impacting livelihood of thousands of farmers.
Imposition of five percent FED in Budget 2019 has negatively impacted juice industries sales volume and resulting in loss of livelihood for thousands of fruit farmers in our value chain. The juice industry of Pakistan is fragmented with a higher concentration of smaller players (large amount of the industry is not paying sales tax, and FED).
Retaining continuous FED on juices will encourage the business of non-tax paying players resulting in loss of tax revenue hence widening the price gap.
Furthermore, any imposition or indirect taxation will induce, encourage and strengthen the unregistered producers and tax evaders to further expand their presence in the market by attractive rates to the middle man.
The tax paying fruit drinks and juices industry will become uncompetitive due to the huge burden of taxes and their major chunk of market share will fall into the lap of tax evaders.
The overall sales tax collection on fruit drinks and juices products will also decrease due to the loss of business volume.
It is proposed to withdraw five percent FED on the juices industry, as it is negatively impacting the business growth and consequently the rural economy, creating unemployment in the juices industry and resulting loss of revenue for the government, the industry added.
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