ISLAMABAD: The government is planning to impose a reduced rate of sales tax on the import of raw materials used in the manufacturing of medicines under the Tax Laws (Fourth) Amendment Bill, 2021.
Sources told Business Recorder here on Thursday that the Tax Laws (Fourth) Amendment Bill, 2021 may withdraw sales tax exemption on the import of raw materials used in the manufacturing of pharmaceutical products, but local supply of medicines would be sales tax zero-rated. Following withdrawal of sales tax exemption on the import of pharmaceutical raw materials, 17 percent sales tax would become applicable as per law.
A proposal is under consideration to impose a reduced rate of sales tax like 10 percent on the import of pharmaceutical raw materials instead of standard rate of 17 percent sales tax to have less impact of taxation on the locally-manufactured medicines.
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In this connection, a meeting is also expected to be held at the Ministry of Finance to review the proposed withdrawal of sales tax exemption on the import of the pharmaceutical raw materials, sources said. To reduce burden of sales tax on medicines, the government is considering the applicability of a reduced rate of sales tax on the import of raw materials used in the manufacturing of pharmaceutical products.
Sources added that the local supply of medicines may be sales tax zero-rated, but the import of raw materials could be made taxable.
Copyright Business Recorder, 2021
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