PVMA resents tax disparities

Pakistan Vanaspati Manufacturers Association (PVMA) has demanded removal of anomaly in taxes between Fata/Pata and settled area ghee industries. In its budgetary proposals, PVMA said the vegetable ghee/cooking oil units in the Federally Administered Tribal Area (Fata) and Provincially Administered Tribal Area (Pata) were exempted from payment of sales tax on imported edible oils, GST as well as income tax as the provision of Sales Tax Act 1990 and Income Tax Ordinance 2001 do not apply to that areas.
On the other hand, it added, the vegetable ghee/cooking oil units in the tariff area were required to pay 15 percent sales tax, 3 percent advance withholding tax at import stage plus 15 percent GST at the manufacturing stage.
Due to anomaly, the vegetable ghee/cooking oil units in the tariff area were loosing viability and market to ghee units in Fata/ Pata. The PVMA said the phasing out of ghee industry in settled areas was creating unemployment besides causing loss to the national exchequer in revenue terms. It added that the anomaly caused Rs 1.5 billion losses to the government during the year 2003-04.
According to the PVMA, the anomaly encouraged more vegetable ghee/cooking oils units to shift at Fata/Pata to aggravate the problem.
It reminded that the government in 2004-2005 Budget levied 15 percent central excise duty on imported edible oil as well as local supplies of vegetable ghee/cooking oil on all the vegetable ghee/cooking oil units including the units located in Fata/Pata. This did bring Fata/Pata units into the tax net but adversely affected the units in the tariff area which were required to pay customs duty on imported edible oils ranging from Rs 98,050 to Rs 10,800 per tonne, excise duty at the rate of 15 percent at import stage of edible oils and 15 percent CED at output stage.
The ghee units in Fata/Pata were enjoying an edge of over Rs 13 per kg over ghee units of the tariff area.
The PVMA has proposed that with a view to eliminate anomaly in taxes between Fata/Pata and tariff area units, custom duty on tariff area units should also be reduced to the level of Fata/Pata and in the meanwhile an ordinance may be promulgated to extend Sales Tax Act 1990 and Income tax Ordinance 2001 to Fata/Pata.
It also demanded reduction in duty on import of tin plate. The PVMA said at present Siddiquesons Tinplate Limited is the only manufacturer of tinplate in the country and as a result they are enjoying full monopoly of the products in the local market. Moreover, they are enjoying total exemption from customs duty on imported raw material, sales tax, income tax etc.
The exemptions to Siddiquesons Tinplate Limited have created monopoly in the market of tinplate and now the company is exploiting the situation by raising the price of tinplate at its own will.