KARACHI: Pakistan Steel Manufacturer’s Association (PSMA) has demanded that the government collect tax on the total weight of ships that are brought for dismantling at the Gadani’s ship-breaking yard.
A PSMA official requesting anonymity said the Federal Board of Revenue (FBR) only collected sales tax on 70.5 percent weight of ships from the ship-breaking industry. He went on to add that the ship-breakers were also exempt from paying 20 percent customs duty, which hindered a level-playing field in the entire steel industry.
“While the government is considering all options to increase its tax earnings, it should seriously consider withdrawing exemptions to the ship-breaking industry.”
According to the official, the practice of not charging sales tax on 29.5 percent of a scrap ship has been going on for almost five years now and has caused losses worth billions of rupees to the national exchequer.
Apart from ship plates and re-meltable scrap, which is taxed by the FBR, shipbreakers get countless expensive revenue generating items from a ship including aluminum, copper, brass, steel ropes, chains, electric cables and switches, machines kitchen items, wood, bunker oil, lubricants and paints which are sold separately.
The PSM official said the unfair and unjustified tax and duty exemptions to the shipbreaking industry is discouraging steel manufacturers who are not only paying all the duties and taxes.
“If the government wants to achieve sustainable growth in the steel sector, it must discourage such exemptions and try to provide a level-playing field to all the players of steel industry.
“In its budget proposals to the FBR, the steel melting sector had requested the imposition of a five percent customs duty and Rs3,500 per ton specific duty on ships imported for dismantling in the country to give a level-playing field and equal competition to all sectors,” he said.
Steel manufacturers also requested FBR to setup a committee to review the taxes and duty structure on different sectors of the steel industry. “The committee should have members from steel melters, ship-breaking industry and FBR so that equal competition in the steel sector can be achieved,” he said.
Source: The News. 27 June 2013