ISLAMABAD: Representatives from various sectors have expressed concerns over the misuse of the tax incentive package for erstwhile Federally Administered Tribal Areas (FATA), claiming that the concessions announced in 2019 are damaging the ghee, edible oil, and steel industries across the country.
Addressing a news conference on Monday, key players in these sectors demanded that the government abolish the exemptions awarded to industries in the former FATA and the Provincially Administered Tribal Areas (PATA) for five years.
Sheikh Abdul Razzak, Chairman of the Pakistan Vanaspati Manufacturers Association (PVMA), highlighted that the concessions granted to FATA included complete exemption from income tax, sales tax exemption both at the local and import stages, customs duty exemption at the import stage on plant and machinery, turnover tax exemption from annual tax returns, and exemption on withholding income tax from local supplies.
“As a result, there is a difference of around 27 percent between the units in former FATA and the rest of the country,” Mr. Razzak added.
He informed that with a total population of around 6.25 million, the requirement for ghee and edible oil in former FATA and PATA should be around 52,000 tonnes during January-May 2024, based on per capita consumption of 20 kilograms annually.
“But the ghee units in these exempted areas have already imported 180,000 tonnes of edible oil, including palm oil, in five months,” he said, adding, “This clearly shows that the ghee and oil mills of exempted areas have been selling their produce in mainland Pakistan, even up to Punjab and parts of Sindh during the past five years.”
Similar issues were expressed by the steel sector, which noted that the tax exemptions amount to around Rs50,000 per tonne of steel products.
Khurram Mughal, CEO of Mughal Steels, and Khawar Suddiquie of Aisha Steels, said that most of the steel units operating in Hattar Industrial Estate, Gadoon Industrial Estate, and Hayatabad Industrial Estate have shut down, with 16 steel units closing in Hattar Industrial Estate, Khyber Pakhtunkhwa, and eight in Islamabad.
Mr. Mughal added that CPEC-related steel units, which Chinese investors had planned to set up at Rashakai Economic Zone, have now been shelved and discarded due to the FATA/PATA tax issue.
