AJK, FATA/PATA: KCCI seeks withdrawal of tax exemption to protect importers of black tea

KARACHI: Senior Vice President of the Karachi Chamber of Commerce & Industry (KCCI) Altaf A Ghaffar has urged the Federal Board of Revenue (FBR) to take notice of the misuse of exemption in taxes and duties granted to Azad Kashmir as well as Federally Administered Tribal Areas (FATA)/ Provincially Administered Tribal Areas (PATA) resulting in substantial loss of revenue, besides pushing the commercial importers of black tea and a major source of revenue out of business.

He stated that the commercial import of black tea was subjected to exorbitantly high rates of taxes and duties having a total incidence of 53 percent whereas the importers from Azad Kashmir and FATA/PATA hardly pay 15 to 19 percent which was resulting in shifting of about 75 percent volume of import to exempted areas which was far beyond their actual consumption while most of it was sold to the customers across Pakistan, depriving the FBR of a major chunk of revenue.

He also pointed out that importers of black tea pay taxes and duties of Rs 6.21 million per container whereas the Azad Kashmir and FATA/PATA pay Rs 1.65 million which clearly indicates that non-exempted importers all over Pakistan were paying Rs 4.56 million extra in case of importing 20-feet container carrying black tea and this difference doubles when importing a 40-feet container.

“It is a sheer injustice being done to legitimate importers of black tea whose businesses have declined sharply over the last few years,” said Altaf Ghaffar, adding that black tea being imported by Azad Kashmir and FATA/PATA with exemption in taxes/duties was purely destined for sale within the Azad Kashmir and FATA/PATA only but it was widely being sold all over Pakistan that has resulted in terribly affecting businesses of black tea importers who have been generating revenue of Rs 3.5 billion annually.

“Furthermore, anomalies have also been created under pressure of the large-scale processors/packers of black tea and different tax regimes have been created for commercial and industrial importers. In principle, the black tea in itself is a finished commodity and consumable without further processing.

Both Commercial importers and industrial packers sell black tea without any change in form, hence it is not justifiable to charge different rates of Withholding Tax, Customs Duty and Sales Tax/ Value-Added Tax etc. This discriminatory tax regime is an obvious anomaly and also a loss to the exchequer,” he added.

Keeping in view the grievances being faced by tea importers, he demanded that tax exemption granted to Azad Kashmir and FATA/PATA should be discontinued by the end of current fiscal year and no further extension be granted after June 2024 which would certainly provide a level playing field to black tea importers who will be able to stay competitive in the local markets.

Copyright Business Recorder, 2024