Industrial inputs import: manufacturers may get WHT exemption certificate

The Federal Board of Revenue is seriously reviewing a budget proposal to introduce a new provision in the Income Tax Ordinance 2001 to allow withholding tax exemption certificate on the import of industrial raw materials consumed by the local manufacturers.
Sources told Business Recorder here on Thursday that the FBR should empower the Chief Commissioners of Inland Revenue to allow exemption certificate on the import of raw materials and inputs used by the domestic manufacturers. This exemption should be conditional and only be issued taking into account different factors with the surety that the raw materials would not be sold in the open market and 100 percent would be consumed by the manufacturers.
Presently, the importers-cum-manufacturers have to pay 3 percent withholding tax on the import of raw materials and no facility of exemption certificate is available to the said category of manufacturers. The facility of withholding tax exemption certificate on the import of industrial raw materials at lower rate of withholding tax should be granted in the coming budget.
The FBR is examining the proposal in view of current trend of imports and deduction of withholding tax on the imports of raw materials by the local manufactures. This would not have revenue implications and it would facilitate the importers-cum-manufacturers. The FBR can place some conditions for the manufacturers for having exemption certificates from the Chief Commissioners, if necessary.