Islamabad, April 04, 2013 (PPI-OT): Mr. Naveed Jan Baloch, Mr. Shaheen Ilyas Sarwana and Mr. Muhammad Ali Vice Presidents of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has urged Mr. Ali Arshad Hakim, Chairman of the Federal Board of Revenue (FBR) to save the ship-breaking industry from total collapse, as it has been overburdened from the arbitrary imposition of huge taxes. In this respect, they gave the example of SRO 140(1)/2013 increasing income tax from 1% to 5%; that is, an increase of 500%. He proposed to provide the industry the relief under SRO 212(1) 2013 by treating them as an industry and reduction of income tax rate to 1%.
They disclosed that the steel re-melting industry is required to pay sales tax at a reduced rate after their sale, whereas the ship-breaking industry is subject to high rates of sales tax in advance on their imports.
Referring to SRO 243(1)/2013, they lamented that ship-breaking has been removed from the ambit of special procedures, thereby withdrawing the facility of payment of sales tax in installments. They argued that it is not possible to imagine how ship-breakers will sustain their business and arrange for funds to deposit such a huge amount of sales tax upfront at the import stage instead of four months for ship weighing up to 10,000 LDT and eight months for ships of more than 10,000 LDT and as such proposed to withdraw it.
They analyzed that the above SROs have been issued one after the other within a period of one month and in turn this has overturned the balance between the ship breaking industry and the steel re-melting industry, as already the sales tax rate was increased from Rs. 4800 to Rs. 5862 vide SRO 592(1)/2012 (23% increase) in the last budget of June 2012. Resultantly, the ship-breakers have stopped the purchase of ships.
It will not be out of place to mention that the ship-breaking industry’s contribution is 20% of the steel sector in Pakistan and has paid more than Rs. 17 billion in taxes over the last four years; whereas the steel melters have a major share, but their contribution to government revenue has substantially reduced.
These harsh provisions on the labour intensive ship-breaking industry will aggravate the poverty and unemployment conditions in Balochistan province and block the source which supplies steel plates at cheaper rates at the behest of powerful lobbies. This is tantamount to monopolization of the steel sector by the steel melters.
For more information, contact:
Syed Masood Alam Rizvi
Federation of Pakistan Chambers of Commerce and Industry (FPCCI)
B-1, Federation House, Main Clifton Road,
Tel: 0092-21-35873691, 93-94
Fax: +9221 3587 4332