PCMA demands removal of Disparity between Domestic Manufacturers and Importers of Input Goods on the Levy of Sales Tax

Lahore, September 30, 2019 (PPI-OT): Pakistan’s Chemical Industry along with other sectors of domestic manufacturing industry are witnessing a severe crisis after the notification of SRO 1002(I)/2019 dated 6th September 2019 which has created an unsustainable discrimination against the local manufacturing industry supplying input goods to Export Oriented Units (EOUs).

A spokesperson of the Pakistan Chemical Manufacturers Association (PCMA), in a press statement issued here today, said that through this SRO, Federal Board of Revenue had made amendments to Export Oriented Units and Small Medium Enterprises Rules 2008 whereby EOUs are able to import input goods without the payment of sales tax whereas the same input goods supplied by local manufacturers will attract the levy of sales tax. This discriminatory treatment between the imported input goods and similar locally manufactured input goods will result in the closure of the import substitution local industry while encouraging unnecessary imports.

Pakistan Chemical Manufacturing Association (PCMA) therefore demands immediate intervention of the government in this matter of great significance so to ensure that there is no disparity and discrimination between imported and local input goods procured by the EOUs, particularly with respect to the levy of sales tax. Either sales tax should be payable on both imported input goods and the local input goods or both the local and imported input goods for EOUs be exempted from the levy and collection of sales tax.

If not corrected immediately, the local industry is at disadvantage and does not have level playing field vis-a-vis imports. Continuation of this situation will result in closure of local manufacturing industry leading to unemployment, revenue loss to the exchequer and drain of valuable foreign exchange of the country. It may be reiterated that chemical industry with a huge potential of imports substitution is a silent but positive contributor in country’s balance of payments deficit as “a dollar saved equals a dollar earned”.

For more information, contact:
Pakistan Chemical Manufacturers Association (PCMA)
407-Eden Heights, Jail Road, Gulberg, Lahore, Pakistan
Tel: +92-42-35786867
E-mail: bds@pcma.org.pk
Website: www.pcma.org.pk