Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has urged Federal Board of Revenue (FBR) to withdraw certain SROs to save shipping industry.

In a statement here, FPCCI Vice Presidents Naveed Jan Baloch, Shaheen Ilyas Sarwana and Muhammad Ali has called upon Chairman FBR, Ali Arshad Hakim to save ship-breaking industry from deterioration. It has been overburdened by arbitrary imposition of huge taxes. They referred to SRO 140 (1)/2013 increasing income tax from 1% to 5 percent.

He recommended to provide relief to the industry under SRO 212(1) 2013 by treating them as an industry and reducing income tax rate to 1 percent.

They pointed out 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 maintained that ship-breaking has been removed from the ambit of special procedures leading to withdrawal of the facility of payment of sales tax in installments.

They argued that it would be very difficult for ship breakers to arrange 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. Sales tax rate was already increased from Rs 4800 to Rs 5862 vide SRO 592(1)/2012 (23% increase) in the last budget of June 2012. This situation , they added, has compelled ship-breakers to stop purchasing ships for the breaking.

The ship-breaking industry contributes 20 percent of the steel sector in the country 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.

The FPCCI leadership said 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

Source: AAP