Dairy association calls for revival of zero rated sales tax regime

Pakistan Dairy Association, a representative body of dairy farmers and milk processors of the country, has expressed concern on the newly announced Budget 2020-2021.

The body was of the view that no initiatives were taken to revive the dairy sector of Pakistan despite submitting three proposals to the government.

If immediate and supportive actions are not taken by the government, we are afraid that industry will collapse leaving millions of families deprived of employment, and livelihood, said Chairman PDA and CEO, Dairyland Pvt Ltd, Sulaiman Sadiq Monnoo.

Pakistan is the 5th largest producer of milk in the world. Dairy contributes 11% to the GDP of Pakistan. The dairy association was of the view that in a conducive environment this has the potential to become an economic powerhouse for the country.

“Dairy sector can play a vital role to revive the rural economy, by only 1% increase in the market share of processed milk can result in additional 2 billion liters of annual milk production and over Rs6 billion of tax revenue for the government," said Senior vice chairman PDA and Managing Director, Friesland Campina, Ali Ahmed Khan.

The association highlighted that the dairy industry has been declining since the abolishment of zero-rating tax i.e. 2016. If this continues, processors will have no option but to close their doors for business, said the association, which called for the revival of zero-rated sales tax regime terming it as a win-win for the government and dairy sector.

The body said that the reimplementation of a zero-rated sales tax regime would create incentives for new foreign direct investments (FDI) for the modernization of the industry. It would also allow the government to earn up to Rs25 billion in overall revenue through sales tax and income tax.

PDA also called for the minimum pasteurization law to be implemented in large cities like Karachi, Lahore, Faisalabad, Hyderabad, Multan, and Rawalpindi/Islamabad so that raw milk is not sold without any format of packaging.