The vegetable ghee and cooking oil industry has proposed Federal Board of Revenue (FBR) to reduce custom duty on imported Tinplate from 20 to 5 percent, Federal Excise Duty (FED) from 16 to 8 percent on imports like sugar (8 percent FED), cut in duty on imported edible oil and reduce withholding tax on imported edible oils in presumptive tax regime mode (minimum mode) from 5.5 to 3 percent in budget (2016-17).
In this regard, Pakistan Vanaspati Manufacturers Association (PVMA) has submitted budget proposals (2016-17) to the FBR having minimum revenue implications, but focusing on rationalisation of taxes, removal of anomalies and promoting competition in the market.
According to the budget proposals of the PVMA, the tinplate importers are paying Custom Duty @ 20% on the C&F price of the imported Tinplate. Siddique Sons, manufacturer of tin plate have increased packing price of container by Rs 30/per container of 16kg packing which is comparatively higher than increase in the price of imported tin plate.
Due to increase in the imported price of tinplate used for fabrication of containers for packing Vegetable Ghee/Cooking Oil, the packing cost of 16 kg container now stands at around Rs 125, meaning thereby per kg packing cost of Vegetable Ghee/Cooking Oil is about Rs 8/- which also result increase in the sale price of Vegetable Ghee/Cooking Oil to that extent.
Withholding tax on imported edible oils in PTR mode (minimum mode) is applicable vide section 148(8) of the ordinance. The rate of said tax was 2% which was raised to 5% vide circular no. 6 of 2013 date 19th July, 2013. Subsequently the rate was enhanced from 5% to 5.5% vide circular no. 2 of 2014 date 17th July, 2014. However, the rate has been substantially enhanced from 2% to 5.5% but is continuing in minimum mode vide section 148(8) of the ordinance.
This anomaly has resulted in to difficulty in book keeping and resulted into over 130% rate of tax on profits against applicable rate of 34%, it proposed.
Currently, the Vegetable Ghee/Cooking Oil Sector is paying the FED @ 16% at the import stage, whereas has been granted exemption from sales tax vide entry no. 24 of the sixth schedule of the Sales Tax Act, 1990.
The Vegetable Ghee/Cooking Oil being an essential Food Item of daily use should not be charged with the Sales Tax or the FED like other commodities exempted from this Tax ie. Wheat Flour (Atta), Rice, Pulses etc.
Vegetable Ghee and Cooking Oil importers/manufacturers are already paying 16% Federal Excise Duty (FED) under Sales Tax Mode and Re.1per kg Fixed Value Addition which is final. On the pattern of sugar if necessitated the rate can be reduced to 8% at the maximum, it proposed.
It proposed that vegetable ghee/cooking oil industry is mainly dependent on the imported Edible Oils and as such the prevalent high rate of Edible Oils in the international market is the key factor for fixing prices of locally made Vegetable Ghee/Cooking Oil.
To control and bringing down the prices of Vegetable Ghee/Cooking Oil there is no option other than the Government initiative for reduction in its taxes. Presently, the total duties/taxes paid by Vanaspati Manufacturers are around Rs 24,000/M.Ton. In the years 2013, 2014 and 2015 Pakistan imported Edible Oils to the quantum of 2.31, 2.44 and 2.69 million M Tons.
After the 18th Amendment in Constitution of Pakistan, 1973, levy and collection of Workers Welfare Fund (WWF) as an Income Tax Levy is no more a Federal Jurisdiction. Therefore the FBR to instruct their RTO’s not to issue notices for collection of provincial levy, it added.
Source: Business recorder