IMF directing to impose turnover tax in SEZs, Senate body told

ISLAMABAD-The Senate Standing Committee on Industries and Production has been informed that the International Monetary Fund (IMF) is directing the government to impose turnover tax in Special Economic Zones, which earlier were declared exempted from taxes.

The meeting of the Senate Standing Committee on Industries and Production was held at Parliament House on Wednesday under the chair of Senator Khalida Ateeb. The Committee reviewed matters regarding excessive rise in steel prices and measures taken to reduce it; exorbitant vehicle prices and delayed delivery; imposition of minimum turnover tax on Special Economic Zones and withholding of LCs; allocation of industrial plots by PIDC; issues and problems faced by Karachi Tools, Dies and Moulds Centre; and retrenchment of employees of Pakistan Steel Mills.

Deliberating over imposition of minimum turnover tax on Special Economic Zones and withholding of LCs the Committee was informed that SBP had not placed any restrictions on private banks for the issuance of LCs. Meanwhile, the officials informed the committees that IMF is asking to impose turnover tax in Special Economic Zones, which earlier were declared exempted from taxes. The Federal Board of Revenue (FBR) is reviewing the matter, the officials added.

While discussing the excessive rise in steel prices and measures taken to reduce it, the Committee was informed that scrap rates have come down in international markets due to a slowdown in the global economy but could not be translated into the local market due to the rise in dollar rates. Reviewing the cost of manufacturing billets and steel bars it was asserted that energy rates and the price of raw material are major factors that affect it. The Committee while enquiring the difference between production of locally manufactured billets and bars and that which is imported was told that details will be submitted in the next meeting. Members stressed the need to incentivise the industry.

Reviewing exorbitant vehicle prices and delayed delivery to customers, the Committee stressed the need for timely delivery. It was asserted that customers that have completed payments must not be charged any further difference that might occur due to fluctuating dollar rates and other local or international factors. Regarding allocation of industrial plots by PIDC, the Committee was informed that all-out efforts are being made to make these SEZs operational. In order to encourage development and growth tax holiday and one time import duty exemption have been awarded to enterprises operating within SEZs. SEZs that come under PIDC are the Korangi Creek Industrial Park, Bin Qasim Industrial Park, Rachna Industrial Park, Naushero Feroz Industrial Park and Karachi Industrial Park. The Committee stressed the need for land holding restrictions to be enforced. 

Discussing issues and problems faced by Karachi Tools, Dies and Moulds Centre, the Committee was informed that it was a self funded organization and was facing problems due to refunds that have been withheld and delayed by the FBR. The Committee directed FBR to release all refunds at the earliest. Discussing retrenchment of employees of Pakistan Steel Mills, the Committee directed the management not to relieve any employee of their duties until the enquiry is complete. The meeting was attended by Senator Fida Muhammad, Senator Faisal Saleem Rehman, Senator Imamuddin Shouqeen, Senator Zeeshan Khanzada, and senior officers from the Ministry of Industries and Production, FBR along with all concerned.

Article source: https://www.nation.com.pk/01-Dec-2022/imf-directing-to-impose-turnover-tax-in-sezs-senate-body-told