The Federal
Board of Revenue (FBR) has decided to announce tax concessions for the shipbreaking
industry to ensure its smooth functioning in prevailing economic situation of
the country. Sources told Business Recorder here that the FBR has decided to
issue a Statutory Regulatory Order (SRO) allowing exemption to shipbreakers
from deduction of advance tax under section 153(1)(a) of the Income tax
Ordinance 2001.
Some other tax
incentives are also expected in the SRO to reduce the income tax and sales tax
liabilities of the shipbreakers. Under the tax incentives package, the shipbreakers
would be exempted from deduction of advance tax u/s 153(1)(a) of the Income Tax
Ordinance 2001. This is subject to the fulfilment of certain conditions. First,
the tax under section 148 of the Income Tax Ordinance 2001 at the import stage
shall be paid at the rate of 2.75 percent. Second, the Commissioner Inland
Revenue shall issue a certificate verifying payment of tax u/s 148 and full
payment of all deferred sales tax liability under sub rule (4) of rule (58H) of
Sales Tax Special procedure Rules 2007 prior to its substitution. Third, the
sub-rule (4) and (5) of Rule-58H of Sales Tax Special Procedure Rule 2007 may
be substituted so as to withdraw deferred payment facility for the shipbreaking
industry.
Details revealed
that the shipbreaking industry is facing serious problems in smooth functioning
due to past income tax and sales tax liabilities. The shipbreaking industry has
a profit margin of less than 3 percent. The industry is subjected to 4.5
percent withholding tax ie 1 percent on import (u/s 148 of the Income Tax
Ordinance 2001) and 3.5 percent (u/s 153 of the Income Tax Ordinance 2001). In
view of low profitability of business of the said industry, the FBR has decided
to give some tax incentives to the said industry. The industry is facing
hardships due to peculiar nature of the business of the ship breaking industry.
The shipbreaking
industry has been allowed the facility of deferred payment under rule 58H (4)
of Sales Tax Special Procedure Rules 2007. Under section 58H (4) of the Sales
Tax Special Procedure Rules 2007, shipbreakers shall pay sales tax at the rate
of five thousand eight hundred and sixty two rupees per metric ton of
re-rollable scrap supplied by them. The quantity of re-rollable scrap shall
constitute 70.5 percent of the total LDT of the ship imported for breaking. The
shipbreakers will clear their sales tax liabilities in respect of ships
weighing up to ten thousand LDT within four months, while in case of ships
weighing more than 10,000 LDT, within 8 months from the date of filing of
Goods Declaration. The sales tax liability shall be discharged by the shipbreaker
either on completion of clearance of goods obtained from breaking of vessel or
within the maximum time period allowed as aforesaid, whichever is earlier,
Sales Tax Special Procedure Rules added.
Source: Hellenic shipping news.8 March 2013
No comments:
Post a Comment