Call for imposing taxes on industries in former Fata/Pata

ISLAMABAD: Renowned business tycoon Arif Habib has asked the government to slap taxes on industries located in Fata/ Pata areas because their goods were being sneaked into the whole country and causing irreparable losses to industries, including steel, ghee & cooking oil and plastic.

Talking to The News on Tuesday night, Arif Habib said that the cabinet members called it a daylight robbery but the proposal for granting one-year extension was approved. In the Finance Bill 2024-25, he added, it was proposed that the GST would be levied in gradual manner as 6 percent GST would be imposed in FY25, 12 percent in FY26 and 18 percent in FY27.

He said that the Fata/ Pata areas were enjoying tax exemptions of Rs80 billion per annum making the country’s formal sector uncompetitive.

He stated that Fata/ Pata companies are exempt from sales tax and income tax on number of items including flat steel i.e. CRC and GI for use in those areas. But it is being grossly abused as the majority of the material is being sold in the Pakistani market without any sales tax pushing all Pakistani players out of the market unfairly who are subject to 18 percent sales tax and 29 percent income tax.

Hence local manufacturers’ capacity utilisation has declined to merely 30 percent depriving the government of revenue and people of jobs, he said. The government is cognisant of its negative implications on national interest and has decided to correct it phase-wise and has levied a 6 percent sales tax on purchases by Fata/ Pata buyers in the Finance Bill.

It has been informed that the government is being pressurised to reverse the proposal of levying a 6 percent sales tax bringing it again to zero in the Finance Act. It will be a disaster for local industries.

It is therefore appealed that the Finance Bill proposal be approved and no reversal be allowed by the cabinet in the Finance Bill/ Act.

Additionally, local manufacturers of CRC and GI steel are allowed to sell their products to Fata/ Pata buyers at similar terms as foreign suppliers are selling to them. He said that they proposed the government to slap 1 or 2 percent tax but the efforts were underway for reversal of the phased tax in the finance bill 2024-25 which is going to be tabled before the National Assembly within the ongoing week.