Chemical importers face financial crunch

Seek schedule for release of pending refund pay orders

KARACHI:

Importers of chemicals and dye raw material have emphasised that they are facing a financial crunch because the Federal Board of Revenue (FBR) has yet to refund their pay orders.

In a statement on Friday, Pakistan Chemicals and Dyes Merchants Association (PCDMA) Chairman Mirza Nadeem Baig expressed concern over non-implementation of the Statutory Regulatory Order (SRO) 1240(I)2020 issued by the FBR.

The order relates to incorporation of chemicals and dye raw material into Part-II (raw material) of the Income Tax Ordinance and directs the Customs department to issue a schedule of refunds as soon as possible so that pay orders, submitted to the FBR, could be refunded to the commercial importers.

In the 2020 budget, the chemical and dye raw material was included in Part-III (finished goods) of the Income Tax Ordinance due to which the FBR began charging 5.5% tax on its import.

The move was opposed by the commercial importers, who argued that the chemical and dye raw material was necessary for the domestic industry and that imported goods could not be classified as finished products, therefore, they should not be taxed at a higher rate.

They pointed out that the raw material was utilised by the local industry to produce finished goods, hence the government could earn revenue on the final product instead of raising tax on the raw material.

The association chairman pointed out that under SRO 1240(I)2020, the previous 2% income tax was restored for commercial import of dye and chemical raw material instead of the 5.5% income tax.

"However, due to non-implementation of the SRO and non-issuance of the refund schedule, the liquidity of commercial importers is stuck in the form of pay orders and traders are facing severe financial difficulties," he said.