LAHORE - The sales tax rate in Pakistan is very high as compared to global tax rates; therefore, sales tax rate should be reduced to 12.5% in order to reduce the already soaring cost of doing business in Pakistan. ‘It should further be gradually reduced to 10% over the next three years for registered entities because the reduced rate will encourage the registration of the unregistered taxpayers to avail the benefits of input adjustment.
Cement industry is subject to Federal Excise Duty at the rate of 5% of retail price and General Sales Tax at the rate of 17% of maximum retail price. These taxes come to around Rs 95 per bag. This high taxation encourages evasion and negatively impacts consumption
All Pakistan Cement Manufacturers Association has requested the government to reduce FED stepwise to zero as announced by the previous government to encourage cement off take as this is not a luxury item because abolishment of excise duty not only eliminates tax evasion but also enhances cement consumption at reduced price. Chairman, APCMA, Mohammad Ali Tabba stated that through the Finance Act, 2014, withdrawal of SRO 575, import duty at the rate increased from 10% and a tariff rate of 20% have been imposed on import of waste and scrap of tyres. ‘It is proposed that this fuel should be subject to nil import duty to bring this alternate fuel at par with other fuels at zero percent custom duty,’ he suggested. Moreover, it is proposed to restore the pre-budget duty structure relating to coal i.e. subject to nil import duty,’ he suggests.
He said coal is one of the few fuels after the budget to have import duty which is a sheer injustice to the cement industry that is the predominant consumer of imported coal in Pakistan and consumes almost 95% of the 4.5 million tons imported annually.