Steel, plastic, ghee, other sectors: Tribal area tax exemptions expire on June 30

ISLAMABAD: The tax exemptions granted to the industrial units of iron/ steel, plastics, ghee, textile and other sectors/ industries located in the erstwhile Federally Administered Tribal Areas/ Provincially Administered Tribal Areas would expire on June 30, 2023.

The sales tax exemption would also expire on the supplies of electricity from June 30, 2023 to all residential and commercial consumers in tribal areas except steel and ghee or cooking oil industries.

The Pakistan Association of Larger Steel Producers (PALSP) has strongly protested with Finance Minister Ishaq Dar against any move to extend concession of sales tax/ Federal Excise Duty exemption on the import of raw materials to steel units established at erstwhile tribal areas.

At the time of the merger of the erstwhile Federally Administered Tribal Areas/ Provincially Administered Tribal Areas in Khyber Pakhtunkhwa in 2018, tax exemptions had been granted to these areas for five years up to June 30, 2023. Currently, several industrial units located in these areas are manufacturing different goods including iron and steel, plastic, ghee, textile, etc.

These units import raw materials through the seaport at Karachi without payment of sales tax and income tax. However, these units are required to sell the finished goods only in the newly-merged districts of erstwhile Fata/Pata and not in the tariff areas/ other districts of the province or in other provinces.

To frustrate and prevent the misuse of the facility of exemption of taxes on the import of raw materials by these units, different measures are being taken by the FBR including the escort of containers from Azakhail Dry Port to the location of the concerned unit.

According to a letter of the PALSP to Ishaq Dar, the FBR authorities are well aware of the fact that how massively this exemption was misused by the steel units located in erstwhile FATA and PATA. It should not astonish anyone that during the period of concession from 2018 to 2023, the facility given to these units crippled the taxpaying units operating in the tax areas of the country. The association is of the viewpoint that it is far better to pay cash money to such steel units or the people of that area instead of extending such facilities anymore which is disastrous for the bonafide taxpaying industry in the country.

Copyright Business Recorder, 2023