Erstwhile tribal areas: Steel sector warns govt against extending tax exemption

ISLAMABAD: The steel sector has warned the federal government that any move to extend tax exemption to erstwhile tribal areas beyond June 30, 2024, would lose Federal Board of Revenue (FBR) tax collection by Rs50 billion in 2024-25.

Steel industry in a meeting with the Finance Minister raised their concerns over the damage caused to the local steel industry due to massive misuse of tax exemptions granted to erstwhile FATA/PATA (NMDs) and demanded for not giving any further extension to FATA/PATA and by disallowing concessions, government revenue will increase by more than Rs50 billion.

The delegation of Pakistan Association of Large Steel Producers(PALSP) met with the Finance Minister and apprised him about the issue linked with the survival of the long steel industry.

Abbas Akberali, Patron in Chief-PALSP appreciated the government measures and strict action against tax evaders. Industry assured its support in curbing the massive tax evasion in sale and purchase of local scrap through use of fake inputs and flying invoices. The industry assured that by by addressing the issue of massive tax evasion in the sale and purchase of local scrap government’s revenue to be increased to approximately PKR 50 billion annually. This will help to document the sale and purchase of the entire local scrap segment which is approximately 20 to 25 per cent of the entire scrap used in the country in steel making.

The steel industry also highlighted that FATA/PATA tax exemptions were massively misused and not only devastated the industry but also gave a revenue hit of hundreds of billions of rupees to the national exchequer. So no waiver/concessions should further be given or extended to steel units in Fata/Pata on their tax liabilities.

The PALSP representative stated that steel industry is currently going through the toughest time of the history. High interest rate of @24 per cent has made unviable for industry to operate. Already industry is operating on very low capacities of 30 per cent and many units’ shutdown.

They also emphasized for lowering Power Tariffs to @9 US cents/KwH for energy-intensive industries like steel and said this measure will strengthen the melting industry which is the backbone of steel industry.

The finance Minister was asked for resolution of value addition related enabling Amendments in Export Facilitation Scheme (EFS) - Copper Export Sector. He was apprised that steel sector have diversified into exports of non-ferrous products and the steel sector emerged as 5thlargest exporting sector with the exports of USD 1.5 billion (2023). By strengthening the backbone of steel industry, the government will help steel industry to give boost exports of copper.

It was also highlighted that in current tough business and economic conditions the levy of high rate of turnover tax is regressive and unjustifiable. Industry asked for rationalisation of the turnover tax rate from 1.25 per cent to 0.5 per cent for steel manufacturing industry and increasing its adjustment period from 3 to 10 years.

Copyright Business Recorder, 2024