Steel manufacturers demand to rationalize customs values of raw material
KARACHI: Steel makers have demanded of the government to rationalize the import valued of raw material (steel scrap), and align it with the rates prevailing in the international market.
“The steel scrap in the global market currently stands at $230-$250/ton, whereas in Pakistan, the imported raw material is valued at a fixed cost of $360/ton, which has significantly increased our production costs,” National Steel Advisory Council (NSAC) noted in a letter to Advisor on Finance Dr. Abdul Hafeez Shaikh.
It may be mentioned here that Federal Board of Revenue (FBR) determines the values of all imported goods, and duty/tax is imposed on these determined values.
The National Steel Advisory Council (NSAC) is an association of 10 leading steel manufacturers in Pakistan accounting for up to 70 percent of the total steel production in the country.
“Steel industry is facing many issues, which need to be addressed by the government to ensure steel is supplied to the construction industry at affordable levels. If the issues are not resolved, cost and quality of construction will be at uneconomic levels undermining the package introduced by the government, since steel is a major item in the cost of construction,” it noted.
NSAC mentioned steel industry had been subjected to double taxation on their closing stock of June 30, 2019. “Our stocks were inspected by FBR officials end June 2019; this was because under the previous method of taxation under Special Procedure Sales Tax was paid at the time of production (regardless of whether goods were sold) and after July 1, 2019 FED in sales tax mode is to be paid at the time of sale. This is a serious issue resulting in double taxation which is against any settled law”.
NSAC proposed to reduce the minimum turnover tax of 1.5 percent on the steel sector to zero. The Council also criticized electricity charges being levied by K-Electric Limited, retrospectively, in the form of fuel adjustment surcharge and backdated withdrawal of industrial support package.
“While the National Steel Advisory Council appreciates the initiatives taken by the government of Pakistan to ease the businesses in the country and promote construction sector, we feel that if steel prices remain high due to increased taxes the cost of steel will be at uneconomical levels for affordable construction and being such a major component, it will undermine the implementation of the construction package as envisaged by the Imran Khan’s government”.