Steel makers demand simple tax laws for Gwadar-related projects

There is a lot of ambiguity in the sales tax rules for steel producers, so they haven’t been able to supply steel to tax-exempt projects in Gwadar, such as the free zone and airport. They have asked the Federal Board of Revenue (FBR) to clear things up.

Secretary-General Syed Wajid Bukhari of the Pakistan Association of Large Steel Producers (PALSP) said that if there weren’t a way for producers to get sales tax exemption, they wouldn’t be able to use this incentive.

FBR has been asked about the Sales Tax Rules 2006, Chapter IV – Apportionment of Input Sales Tax, sub-rules (1) and (2), as well as the industry’s concerns about them, he said (2).

If you pay sales tax when you make a purchase, the Sales Tax Rules say that you can’t change that money and put it back into a different investment.

Also, sub-rule 2 of Chapter IV says that the manufacturer can’t change the number of input sales to the amount of sales tax exempted under this law in any other supplies. It is against the law as well as unjustified.

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They said that the association had raised concerns about the relevant rule, which “interestingly” tries to punish the manufacturer and only benefits the buyers. Under this rule, it’s not allowed if the sales tax input amount is equal to the amount that isn’t taxed. They have no choice but to pay sales tax, so manufacturers can’t get back the money they spent.

Mr. Bukhari said that the government had given the domestic industry a break to supply world-class materials to the Special Economic Zones (SEZs), Gwadar projects under the CPEC, export processing zones (EPZs) and other prominent government projects. It will help create more jobs and increase investment in the local economy.

But the real world is different. He said that contractors in the Gwadar Free Zones aren’t buying steel from local businesses. Instead, they’re getting it from other countries.

He asked the government to change the rules so that the local steel industry could supply steel to tax-exempt projects so that the local industry could benefit from these big projects.

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