In
the budget proposals 2012-13, forwarded to the Engineering Development Board
(EDB), the steel melters asked the government to enhance duty rate on
ship-breaking plate to be used massively in steel re-rolling and steel melting
industries. They highlighted that their sector falls in the category involving
heavy finances, high turnover but low profits.
Managing
Director of the Siddique Iron Industries Private Limited and executive
committee member of the LCCI Mian Abdul Rehman Aziz Chan, while talking to The
Nation, suggested comprehensive changes in the sales tax, income tax and
withholding tax regimes in the upcoming budget (2012-2013) to ensure a balance
in the imposition of duties and taxes on the steel melting and ship-breaking
industries.
He
proposed a revision of the taxation regime to compete with ship-breakers.
Stressing the need for providing a level playing field to both, the steel
industry claimed that ship-breakers had been given advantage in taxation, which
needs to be checked in the coming budget. An equal taxation regime, he said,
should be applicable for both the steel sector and ship breaking industry. The
melting industry fulfils 80 percent of the needs of the domestic industry, he added.
He
said that the steel melters are contributing the most in Wapda’s revenue
collection, as they pay electricity bills of up to Rs25 billion annually. The
members of the Steel Melters Association submitted Rs30 billion tax last year
while Rs18-20 billion have been submitted under the head of only sales tax, he
pointed out. He stated that the steel sector has invested around $250m in just
last five years.
He
said that within 2 years, $100 million investment just from steel sector has
gone out of the country, due to FBR’s unjustified policies and double taxation,
coupled with the apathy of the EDB and energy issues in the country.
He
said that there are two types of steel industries including steel melting
units.
In
case of composite units, it covers a unit having facility of both, steel
melting and steel re-rolling with one electric connection. The suggested rates
of final tax on electric bills included Steel Melting Units 62 paisas per unit
of electricity consumed and Composite Units 75 paisas per unit of electricity
consumed.
“This
would help increase revenue collection of the government, the exemption
certificate will also be done away with and the tax would easily be collected
from those units, which are not following special procedure,” he said. The stell melters proposed that exemption
should be granted from payment of income tax at the rate of one percent on
turnover under Section 113 of the Income Tax Ordinance, 2001. The PSMA has also
demanded that exemption from payment of withholding tax either at one percent
or at 3.5 percent on supplies and purchases under Section 153 of the Income Tax
Ordinance, 2001.
The
industry asked to reduce turnover tax from one percent to 0.2 percent in the
coming budget 2012-2013 as the industry was undergoing low profits’ phase of
business. It said that the
non-documented steel melting units are the beneficiaries under the scenario as
the organised steel melting industry is being rendered uncompetitive due to
heavy tax burden.
“In
order to balance it, the industry suggested that for Association of Persons
(AOP), individual limited or proprietorship companies the turnover tax be
reduced from 1 per cent to 0.2 per cent,” the budget proposals said.
Source: The
Nation. By Salman Abduhu. 25 April 2012
http://www.nation.com.pk/pakistan-news-newspaper-daily-english-online/business/25-Apr-2012/government-asked-to-enhance-duty-on-ship-breaking-plate
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