Committee recommends lifting ban on imports of luxury items
KARACHI: A budget anomalies committee made up of Pakistan’s leading businessmen recommended on Friday lifting the ban on imports of luxury items.
“As the ban imposed on the import of luxury items was for a temporary period, so it should be lifted and imports can be controlled through tariff rationalization,” according to the recommendations of the abnormality committee set up by the Ministry of Foreign Affairs. Finance under President Zubair Motiwala.
READ MORE: The FPCCI identifies tax anomalies in the 2022-2023 budget
The committee held its meeting in Islamabad which was attended by Member (Customs Policy) FBR Ms. Surraiya Ahmed Butt and Member (IR Policy) FBR Afaq Ahmed Qureshi along with Chairman of Businessmen Group Mian Anjum Nisar , Chairman KCCI Muhammad Idrees, Chairman Islamabad Chamber Shakeel Muneer, Chairman Overseas Investors Chamber of Commerce & Industry (OICCI) Ghiyas Khan, CEO Pakistan Business Council Ehsan A Malik, Deputy Chairman Quetta Chamber Amjad Siddiqui, Secretary General OICCI Abdul Aleem, Syed Asad Ali Shah, who represented the Mutual Funds and Insurance industry, representatives from the Marbles Association and others while the rest of the Anomalies Committee members also joined the meeting via Zoom.
The committee discussed to the hilt all the anomalies arising from the recently announced federal budget and each of the following items was discussed in detail:
READ MORE: FBR forms committees to remove anomalies from budget bill
A rate of 1% withholding tax (WHT) was applicable on industrial imports of polymers and polyester filament yarns, while it was proposed to increase the tax from 2% to 4% under of the final tax regime for commercial importers, which constitutes outright discrimination. . The difference between trade and industry should not exceed 1 percent. Therefore, the WHT on commercial importers can please be kept intact at 2% with FTR under SRO 1125.
It was unjustified to impose a 3% value added sales tax on the commercial importation of polyester plastics and yarns, which can be withdrawn.
The 17% sales tax imposed on livestock feed made from agricultural waste PCT Code 2308.0000 Pulse Husk Waste for Livestock Feed and PCT 2306.9000 Palm Kernel Cake/Expeller should be removed as not in use than to feed milking heads.
In order to increase exports, it is imperative to revive SRO. 1125 in its true spirit and reintroduce the system of non-payment and non-refund of sales tax for the five export-oriented sectors.
A statutory duty of 20% has been imposed on soda ash, which needs to be removed as it is the basic raw material for the export-oriented value-added industry.
READ MORE: Main tax measures taken as part of the 2022 finance bill
The duty rate on the import of flavorings has been reduced from 11% to 3% for snack manufacturers, which is to be brought back to the previous level of 11%.
Although the removal of sales tax on solar panels was very graciously announced by the Prime Minister, the other components needed to operationalize solar panels were still charged with sales tax, which was identified as a anomaly that must be removed.
The indentation commission is an important source of foreign exchange earnings, so it can basically be treated as an export product and on par with other export products.
Under Section 5 (29) B of the Finance Bill, plastics, edible oil, packaging materials and paper were excluded from the FTR, which is discriminatory. Therefore, the FTR can also be extended to these elements.
All jewelry retailers have been added to Tier 1 retailers which are to be reviewed and the jewelry sector should be allowed under the final tax regime. Since sales tax exemption is allowed on bread for all others, the same should be extended to bread and rusks when sold by Tier 1 retailers.
READ MORE: The FPCCI identifies tax anomalies in the 2022-2023 budget
Furniture stores/showrooms, which are not part of a national or international chain of stores or located in air-conditioned shopping malls, should be excluded from the category of subsection 43-A of the 2 of the Sales Tax Act 1990. All small furniture shops/showrooms can be declared as a cottage industry (5AB) and the covered area condition can be removed and small furniture retailers can be placed in the fixed tax category. It will protect craftsmen/workers/owners of furniture stores/showrooms from further harassment and their business will be safe in addition to preserving the craft trade throughout the country.
Although the requirement of CNIC for supplies to unregistered persons has been waived under the relevant article of the Finance Bill, but the said clause of the Finance Bill and the relevant provisions of the tax law of Sale 1990 may be appropriately amended to clarify several reservations regarding the requirement for the provision of details of unregistered purchasers and 3% additional tax.
Tariff anomalies on black tea can also be removed and exemptions granted to certain areas should be withdrawn, which would not only eliminate the threat of smuggling, but also discourage the misuse of the Afghan transit trade.
Statutory duty of 20% and additional customs duty of 6% on pencils and statutory duty of 30% on precision wire for the manufacture of staples can be waived.
The 17% tax on ships and boats should be immediately withdrawn and zero duty/exemption status should be restored in accordance with the ratified National Shipping Policy of 2001, which was valid until 2030 .
Section 8B limits the input tax adjustment to 90 percent of the output tax. Currently, this provision is not applicable when monthly exports represent more than 50 percent of total sales.
Wire traders are not allowed to claim refunds for 14 months, which is a gross injustice and should be put on equal footing with other traders.
Implementation of SRO 598(I)2022, prohibiting certain items, may be extended until July 31, 2022, to allow shipments in progress to clear customs.
There is a need to rationalize tariffs for auto parts which were not manufactured in Pakistan but subject to smuggling. Therefore, duties on auto parts should be imposed according to the specification of the auto part and not on the basis of the vehicle for which it will be used.
Due to FATA/PATA concessions, the cost of steel bars is almost 40% lower than in the whole of Pakistan, which needs to be rationalized to provide a level playing field for local steel manufacturers. steel.
Since airlines have ceased any form of commission to travel agents, it has been recommended to treat travel agent on equal footing with small traders and they can be subject to FTR and charged on the basis a percentage of electricity bills.
The imposition of a 30% statutory duty on the import of high carbon steel wire rod should be rescinded as they are imported as raw material to produce high quality products.
The income tax rate is to be reduced to 2% on the import of PVC electrical insulating tape.
The marble sector should be treated equally with steel re-rollers and allowed a fixed tax on electricity bills.
In the case of mutual funds, the tax credits granted under Articles 62 and 63 of the tax ordinance will not affect the collection of revenue, so the same can be reduced to the previous position.
Regulatory duties must be waived on hydrogen peroxide as it is the basic raw material for all kinds of value-added textiles and other related industries.
Knitting oil is subject to a duty rate of 26 per cent which must be reduced to the level of spinning oil.
The weaving industry is suffering from the low import duty rate of woven fabrics and needs additional support to manage the current capacity and improve it.
The duty on Bopet Film was reduced to 16 per cent. It was requested that the old rate of 20 per cent not be reduced.
Locally produced charcoal was allowed at the minimum sale price without any input adjustment amounting to Rs. 2500/- which was removed in the current Finance Bill. This needs to be restored to the same is used in the brick kiln and the bricks are used in the construction industry.
Since the 17 billion rupees allocated for the promotion of the IT sector is insufficient to meet the ambitious goal of IT exports of 15 billion dollars, this allocation could be increased between 75 billion rupees and 100 billion rupees.
Apart from these many other relevant anomalies and critical issues have been put up by FPCCI, OICCI, PBC, Chambers of Commerce and Industry of Karachi, Islamabad, Quetta and several other associations.
Chairman of the businessmen’s panel, Mian Anjum Nisar, while commenting on the overall economic scenario, pointed out some glaring anomalies and these have been taken care of and compiled accordingly.
All of these measures and more were discussed and Finance Minister Miftah Ismail, who joined the meeting with FBR Chairman Asim Ahmed just before its conclusion, was asked that these are the obstacles to progress. of the industry and that they need to be dealt with at the top. priority. Regardless of the issues arising from the budget or the previous supplementary budget of January 2020, these therefore created a lot of problems, the committee members asked to remove them.
The Minister of Finance, after discussing some important points, assured that the Ministry of Finance would try to accommodate 95% of the anomalies suggested by the committee.