Importers urge removal of sales tax on sugar

Say if tax remains applicable, sugar price will continue to be on higher side

Importers have urged the government to present a clear policy by eliminating sales tax on sugar import so they could initiate the import process.

Earlier, the government decided to permit the private sector to import sugar duty free in the wake of a significant hike in the sweetener’s price.

“In its decision, the government allowed the private sector to import up to 200,000 tons of sugar without paying any duty,” said Cereal Association of Pakistan Chairman Muzammil Chappal.

He added that the Federal Board of Revenue (FBR) had also decided to exempt from sales tax the purchase of sugar from the international market keeping in view the rising cost of the commodity.

The revenue authority had allowed traders to import sugar to fill the shortfall in the domestic market, however, the government had not waived 18% sales tax, he said.

“Traders are anxious over delay on part of the government on the issue of sales tax exemption,” he said.

“The government has started giving import quotas to businessmen for sugar purchase but if it does not waive sales tax, imported sugar will not make any difference in the local market,” he said.

“This way, government’s efforts aimed at reducing prices in the local market will go in vain.”

He elaborated that when a trader imported sugar, he was liable to pay 1% sales tax at the port and an additional 17% tax when the commodity was sold.

The government announced exemption from the duty on sugar import but it did not issue a notification pertaining to sales tax waiver, he regretted.

“The government granted approval to the private sector for sugar import after attempting to import the commodity itself,” said the cereal association chairman.

However, he added, importers were reluctant to accept sugar quotas until the government issued a clear policy with regard to sales tax. He stressed that exemption from 18% sales tax would play a vital role in decreasing sugar prices in the domestic market.

At present, sugar prices in the local market stand at around Rs95 per kg while the international price of sugar translates into around Rs85.

“If sales tax is added, the price will go above Rs100 per kg, thus rendering international sugar uncompetitive in the domestic market,” he said.

He called on the government to issue a clear policy by eliminating the sales tax, otherwise, traders would avoid the offer and the matter would remain unresolved.

Published in The Express Tribune, September 12^th, 2020.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.