PTA seek advice on raw material taxes

Pakistan
Published:  20 August, 2013

The Pakistan Tanners Association (PTA) has claimed that new taxes SRO 283(1) 2011 and SRO 505(1) 2013 have created confusion among tanners regarding application of zero rating facility on the entire registered supply chain and they have asked the Ministry of Finance for clarification. 

PTA Central Chairman Agha Saiddain in a letter to the Federal Minister of Finance pointed out that hides and skins fall under PCT heading No 41.01 to 4101: 9000. He said tanners need clarification as they are confused regarding application of SRO 283(1)2011 and SRO 505(1)2013. Under the SRO 283(I) 2011, zero rating covers whole registered supply chain both import and local supplies except retail, he said and added that SRO 505(I) 2013 is applicable on taxable goods meaning that it is not applicable on supply or import of hides or skins which are not taxable for being agriculture produce like live animals meat and beef and raw cotton. The hides or skins are purchased from small butchers from all over the country and on Eid-e-Qurban from people carrying 4 or 5 skins on bicycles. For this reason hides and skins were never been taxable even in our competing countries such as India, China, Vietnam, Cambodia, Malaysia, Indonesia, Taiwan etc. It would be a unique example if hides or skins are made taxable even from unregistered people.

If a sales tax is charged from unregistered people no one will buy Qurbani skins which are purchased from mosques and welfare institutions which are not-registered say the PTA.

He said that SRO 283(I) 2011 dated April 1, 2011 clearly indicates that zero-rating facility shall cover the whole registered supply chain covering both import and local supplies except retail. Thirdly, SRO 505(I) 2013 dated June 12, 2013 has created confusion and anomaly in rules.

He said that governments have always zero rated local supply and import of hides and skins was not disturbed due to a number of factors considered by the Federal Board of Revenue. Hides and skins are zero rated in India, China, Bangladesh, Turkey, Indonesia, Vietnam, Cambodia, Philippines and other competing countries. Levy of duties and taxes would have rendered leather industry of Pakistan non-competitive.

Over the past six years the PTA has informed the authorities about various reasons for decline in exports and stagnation. As against global growth of 40% has Pakistan lost a market share of 39% in past six years, he added.

Source: Business Recorder

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