KARACHI: Negotiations on the import of
around 10 ships have failed between the shipbreakers and their foreign sellers
due to the rising financial burden on the industry following issuance of the
sales tax and income tax notifications by the Federal Board of Revenue (FBR),
shipbreakers said on Monday.
“The consignments are now diverted to India
and Bangladesh as local importers are unable to purchase and subsequently
produce raw materials for the construction industry,” Dewan Rizwan Farooqui,
chairman of Pakistan Ship Breaking Association, said.
Members of the shipbreaking association and
allied industries staged a protest and hold a press conference at the Karachi
Press Club against the Federal Board of Revenue’s (FBR) discriminatory
statutory regulatory orders (SROs), making the ship-breaking industry
uncompetitive in the steel sector.
The chairman said that another seven ships
that were imported are stuck at the clearance stage due to amendments brought
in the tax regime for the ship-breaking industry. The FBR issued an income tax
related SRO on February 26 and the sales tax SRO on March 26 for enhancing the
tax rate at the import stage and forcing the shipbreaking industry to pay their
dues at the time of clearance instead of paying liabilities at the sales stage.
The members of the association alleged that
while issuing these notifications, the revenue body was under the influence of
the melting industry, which was not only enjoying tax concessions but also
selling the products on higher rates in the market. The chairman said that the
re-melting industry is paying sales tax at Rs3,200 per metric ton, while shipbreaking
industry is paying Rs5,862 per metric ton. “Instead of facilitating the fact,
the FBR further burdened the shipbreaking industry by withdrawing facility of
the sales tax installment,” he added. In the recent sales tax notification, the
FBR directed the customs authorities not to clear import consignments of the
ship-breakers without the sales tax collection.
Earlier, the shipbreakers were required to
clear their sales tax liabilities in respect of ships weighing up to 10,000
light displacement tonnage (LDT) within four months, while in case of ships
weighing more than 10,000 LDT, within eight months from the date of filing of
the goods declaration.
The sales tax liability was to be
discharged by the shipbreaker either on completion of the goods clearance
obtained from breaking of vessel or within the maximum time period allowed as
aforesaid, whichever was earlier.
The shipbreakers also
protested the 400 percent increase in the income tax at the import stage. “The
FBR made the industry uncompetitive in the local market by increasing the
income tax rate from one percent to four percent,” Farooqui said.
The association said that the statutory
regulatory orders had been issued one after the other within a period of one
month and in turn this had overturned the balance between the ship-breaking
industry and the steel re-melting industry.
“The shipbreakers paid Rs17 billion under
the heads of sales and income taxes during the last four years,” the
association chairman said, adding that despite facilitating the re-melting
industry, the country suffered a revenue loss of Rs12 billion. They also said
that due to the shipbreaking industry, steel bars, the main raw material for
the construction industry, is available at Rs62,000 per metric ton, while the
products produced by the re-melting industry is around Rs75,000 per metric ton.
The association members said that the
re-melting industry has been allowed sales tax payment on 800 units of
electricity for the production of one metric ton. They alleged that it was a
way of tax evasion as the re-melting industry consumed 600 units for production
of one metric ton.
Farooqui said that the revenue body should
immediately withdraw the SROs, otherwise the industry would have no other
option but to closed down shipbreaking yards that would result in skyrocketing
prices of steel bars.
Source:
The News. 2 April 2013
No comments:
Post a Comment