Steel makers demand 18% tax on local scrap

Steelmakers urge FBR to impose 18% sales tax on steel furnaces using local scrap, citing Rs30bn loss to the exchequer.

LAHORE:

The inexplicable delay in implementation of budgetary measures to modify tax regime for the steel producers procuring local scrap from unregistered suppliers to stop tax evasion as well as to prevent its harmful impact on organised steel makers has caused a loss of over Rs30 billion to the national exchequer since July, say industry players.

The tax-compliant, organised steel makers claim that the government is suffering a monthly tax loss of Rs8 billion due to the reluctance of the Federal Board of Revenue (FBR) to impose 18% sales tax on the steel furnaces using local scrap.

"This is happening at a time when the FBR is facing a shortfall in its tax target and is trying to improve enforcement and compliance," remarked Javaid Mughal, one of the largest players in the steel industry. Tax authorities have not issued the required SRO despite several meetings of steel millers with top FBR officials.