Steel producers demand simple tax rules for Gwadar project  


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20/02/2022 3:02 pm  

As per the reports, steel producers petitioned the Federal Board of Revenue (FBR) on Tuesday to address ambiguities in sales tax laws that prevent them from supplying steel to Gwadar's large duty-free projects, including free zones and airports.

Syed Wajid Bukhari, secretary-general of the Pakistan Association of Large Steel Producers (PALSP) said producers could benefit from this incentive because there is no formal process for obtaining a sales tax exemption.

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He said the association met with FBR with concerns about Sales Tax Rule 2006 and Chapter 4 – Input Sales Tax Allocation, Sub-Rules 1 and 2.

The sales tax rule prohibits the adjustment of sales tax paid at the input stage on other supplies under sub-rule 1 of Chapter IV.

According to our sources, steel producers petitioned the Federal Board of Revenue (FBR) on Tuesday to address ambiguities in sales tax laws that prevent them from supplying steel to Gwadar's large duty-free projects, including free zones and airports. 

Syed Wajid Bukhari, secretary-general of the Pakistan Association of Large Steel Producers (PALSP) said producers could benefit from this incentive because there is no formal process for obtaining a sales tax exemption.

In addition, sub-Rule 2 of Chapter IV states that manufacturers cannot modify input sales for other supplies within the amount of sales tax exempted under this rule, which is illegal and unreasonable.

In a statement, he said the association had expressed concerns about the regulation, which strangely seeks to penalize manufacturers while benefitting only buyers. Under this law, sales tax input equal to the tax-exempt amount is effectively denied. As a result, producers have little choice but to claim a refund of the sales tax paid.

Bukhari is said that the government has provided exempting domestic industries to supply world-class materials to SEZs, CPEC projects in Gwadar, Export Processing Zones (EPZs) and other large-scale government projects for the government to create more jobs and attract investment in local industries.

But the truth is somewhat different. He lamented the fact that Gwadar Free Zones' contractors chose imported materials rather than using local companies to get their steel supplies.

He asked the government to change the law and take immediate action to allow the local steel sector to supply steel for major duty-free projects so that the domestic steel industry can benefit from these mega-projects.

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