KARACHI: The shipbreaking industry has urged the government to provide
it a level-playing field along with steel re-melting industry by immediately
withdrawing controversial notifications issued recently by the Federal Board of
Revenue (FBR).
Addressing protesting workers outside the Karachi Press Club (KPC) on
Monday, Pakistan Ship-Breakers Association (PSBA) leaders warned the FBR that
if their demands were not met, they would be left with no choice but to close
down the industry.
During a press conference later on, the PSBA leaders alleged that
their industry was being discriminated upon by the FBR.
“An attempt is being made to cripple the shipbreaking industry which
provides job to over 25,000 direct workers in the underdeveloped area of
Balochistan at Gadani,” the leaders maintained.
The FBR has given undue advantage in the rates of income tax and sales
tax to the steel re-melting industry through recently issued SRO 140(1)/2013
dated 26.02.2013 and SRO 243(1)/2013 dated 26.03.2013, the leaders alleged.
Explaining the higher incidents of income tax on ship-breaking
industry after the issuance of SRO 140, PSBA chairman Dewan Rizwan Farooqui
said: “The ship-breaking had been paying one per cent income tax but now we
have been asked to pay five per cent. This means an increase of around 500 per
cent in income tax.”
Prior to this notification, he said, both the shipbreaking industry
and steel re-melting were paying 1pc income tax as per second schedule, part II
clause 9(b) of the Income Tax Ordinance 2001.
“Though both shipbreaking industry and steel re-melting industry are
in direct competition with each other yet the FBR has given one an advantage
over the other in the rates of income tax and sales tax. This could become the
cause of closure of ship-breaking business,” he added.
Similarly, he said, the SRO 243 has removed shipbreaking industry
from the ambit of special procedures.
“This means that now the industry will have to pay sales tax in lump
sum at import stage which is not possible for any one,” he added. In the past,
he said, importers of ships meant for dismantling used to pay sales tax in
installments and that was also categorised. “For a ship weighing up to
10,000LDT (light displacement tonnage) were to pay in four months and for ships
for more than 10,000LDT in eight months,” he informed.
Dewan said that purchase contracts by Pakistani importers of around
ten ships have been cancelled and these ships were diverted to Bangladesh and
Indian ship-breaking yards. Another seven ships which were in the pipeline have
reached the Gadani ship-breaking yard, however their owners are in financial
crisis as they cannot pay high incidents of taxes announced by the FBR in a
short period of one month.
“How is the ship-breaking industry to survive if we have to pay
Rs5,860 per tonne towards sales tax as against Rs3,200 per tonne being paid by
steel re-melting industry?”
The PSBA chief warned that if the FBR fails to withdraw the
controversial SROs the ship-breaking industry will close down and this will
directly hit construction industry because prices of steel bars will shoot up
from the present level of Rs65,000 per tonne to Rs80,000 per tonne.
Source: By Parvaiz Ishfaq Rana. 2
April 2013
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