ISLAMABAD: In its proposal to withdraw Statutory Regulatory Orders (SROs), the government may rescind concessionary custom duty rates given to farmers, manufacturers of home appliances, leather, carpet and food processing units while exploration and production companies may also have to pay normal tax rates on import of plants and vehicles.
Tax authorities may also enhance custom duty rates on the import of agriculture diesel engines from 15% to 25%. The custom duty rates on agriculture pesticides may be doubled to 20%, which will provide importers with an excuse to enhance prices of their products.
According to the proposal, duty rates on imports of stationary are to be tripled.
Concessionary custom duties on imports for sugar mills, cement, industrial chemicals, fertiliser and power generation machinery may also be doubled to 10%, shows a working of the Federal Board of Revenue (FBR).
Import duties on televisions, VCDs, CD players, microwave ovens may be increased from 15% to 25%. Tariff rates for the artificial leather industry may be doubled to 20%, for defence stores from 15% to 25%, diapers and sanitary napkins from 10% to 25%, disposable syringes from 10% to 25% and on masterbatches 10% to 25%.
The proposals are aimed at further deepening tax reforms initiated last year under the $6.6-billion International Monetary Fund programme. Under phase-II of the withdrawal of SROs – legal instruments used to modify standard tax rates – the FBR wants to withdraw SRO 565 of 2006.
SRO 565 offers concessions to various manufacturers.
The FBR also wants to remove some of the items from SRO 678 that guarantee preferential treatment to oil and gas exploration and production companies, according to the sources. It has proposed that the import of machinery, equipment, materials, specialised vehicles or vessels, picks-ups (4x4), helicopters, aircraft, accessories, spares, chemicals and consumables by exploration and production companies should be charged at normal tariffs.
The sources said that the FBR has also proposed that the period of retention of goods imported by exploration and production companies on import-cum-export basis should be fixed only for two years. Any extension beyond this period should be subjected to 1% of the surcharge for each year.
The government has proposed that concessionary duty rates on the import of air-conditioners, chilling and industrial refrigeration plants may be increased from 15% to 25%. The rates for alkyd resins may also be increased from 10% to a normal tariff rate of Rs9,050 per ton plus 20% custom duty of the import value. Import duty on bolts, nuts, and screws are also proposed to be increased from 20% to 25%.
The SRO 565 had been issued to give quota-based exemptions from custom duties on specified raw materials, components, sub components, assemblies for 59 local industries. The Ministry of Finance had worked out roughly Rs11 billion losses due to concessionary imports under this SRO during the last fiscal year 2013-14.
The SRO gives preferential treatment to the manufacturers of home appliances, leather, footwear, soap, metallic yarn, packaging films, tyre and tubes, stationary, sugar mills, pesticides, tufted carpets and liquid food processing.
Under the first phase implemented from the current fiscal year, the government had either fully withdrawn or reduced the concessionary rates on imports of 151 kinds of raw materials.
The government may also enhance rates on imports of dry battery cells from 5% to 25%. The rates on import of industrial switchgears and high voltage electrical switches are proposed to be increased from 15% to 25%. Duty on import of toilet soap industry may also be enhanced to 25% from 15%. Similarly, the tyres and tube industry may also see enhancement in CD from 5% to 20%.
Duty on aluminum processing industry may go up from 15% to 25%. The raw materials for fan industry are proposed to be increased from 10% to 25%, on electronic meters from 15% to 25% and on spark plugs form 5% to 25%.
The tariffs on import of liquid food processing industry for dairy and juices may also be enhanced form 10% to 25%.
Published in The Express Tribune, May 13th, 2015.
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