Noorani terms 3pc VAT on PFY unfair
KARACHI: Chairman Standing committee on imports, convener yarn trade committee, Federation of Pakistan Chambers of Commerce & Industry (FPCCI) and former chairman Pakistan Yarn Merchants Association (PYMA), Khawar Noorani has termed the 3pc value addition tax (VAT) on Polyester Filament Yarn (PFY) (5402.4700?5402.3300) as unfair, which is basic raw material of textile industry & SMEs sector and demanded the government to abolish VAT on PFY in view of the ongoing economic crisis due to Covid-19 pandemic.
Khawar Noorani said that import activities are already stalled due to the corona epidemic while industries are also facing severe economic crises, so the government should take steps to facilitate trade & industry instead of creating difficulties. But on the contrary, it has been observed that as a result of government measures, it is becoming more and more difficult to do business.
“The government had announced in the federal budget that no regulatory duty (RD) and value addition tax (VAT) would be levied on raw materials, but in practice no such measures were seen,” he added if manufacturers import raw materials, no VAT is levied whereas when commercial importers import the same raw materials, 3pc VAT is levied at the import stage, which is a total injustice with commercial importers.
Khawar requested that although industrial & commercial importers both import raw materials to meet the production needs of the industries, why is there a separate classification? Therefore, the distinction between industrial & commercial importers should be eliminated and business opportunities should be provided on the basis of equality by levying equal taxes.
He further said that local manufacturers barely manage 20 to 25pc of PFY demand, while the rest is met by imported raw materials. Nevertheless, the government insists on protecting local manufacturers and imposing taxes on the import of basic raw materials for the textile industry & SMEs, which is beyond comprehension.
He urged the government that when cheap raw materials will be imported, the production cost of industries will also come down, which will enable domestic industries to compete in international markets. Otherwise, in the face of the global economic crisis caused by the corona, it will not be possible for exporters to compete in the price race.
Khawar Noorani also demanded the government to withdraw the decision to impose 2.5pc regulatory duty and also abolish anti-dumping duty on PFY to ensure supply of raw materials to textile industry & SMEs at reasonable prices.