Fata, Pata ghee mills: PVMA threatens to shut units if tax concession not withdrawn

KARACHI: Pakistan Vanaspati Manufacturers Association (PVMA) has announced country wide closure of factories, if the federal government does not withdraw the tax concessions granted to Ghee factories of FATA and PATA.

Addressing a press conference on Friday at Federation House, Sheikh Abdul Razzaq Chairman PVMA along with Sheikh Amjad Rasheed former chairman, Sheikh Umar Rehan former vice chairman PVMA, and other industry representatives said that tax concessions given to the FATA and PATA are affecting the entire Ghee sector.

They informed that the ghee industry of the entire country except FATA and PATA is paying Rs 85 per kg tax to the government while FATA and PATA factories are paying only Rs 15 per kg tax. Due to this disastrous difference of Rs 70 per kg, the government treasury and Ghee industry is facing huge losses.

“If tax concession scheme to FATA and PATA is retained in Budget 2024, all ghee and oil factories will be closed across the country from July 1 to protest against this discrimination,” they said and added that in addition, PVMA has decided to knock on the doors of the court for justice. Abdul Razzaq said that some 26 oil and ghee factories are operating in FATA/ PATA and paying only Rs 15 per kg tax to the government. While, some 156 ghee mills were working across the country with Rs 85 per kg tax; however, due to this discrimination fifty percent of the ghee mills have already been closed as they are unable to compete with FATA and PATA companies that are paying 82 percent less tax compared to Ghee factories operating in the other parts of the country.

He warned that if the government does not address this issue, the price of ghee will be increased by Rs 10 to Rs 12 per kg with the passing of the budget 2025.

He informed that FATA and PATA have a total population of 6.25 million, and an average person in this population does not consume 17 kg of king oil per year. As per these statistics, about 100,000 metric tons of edible oil annually is sufficient, but the FATA and PATA Ghee units have imported about 353,000 metric tons of oil in FY24, which is much higher than the actual requirement.

The government is losing some Rs 43 billion annual tax revenue due to this tax concession as excess oil, ghee and cooking oil are being sold in the other parts of the country. Similarly, tax exemption given for the past six years, then the government has suffered a loss of about Rs 180 billion to Rs 200 billion, Abdul Razzaq mentioned.

“FATA and PATA edible oil and Ghee industry has already availed tax concessions for the past 6 years and now one more year extension is not accepted. The government must provide a level playing field to all industries”, he said.

Sheikh Umar Rehan said that at present, Pakistan ghee industry is an industry worth about Rs 2400 billion and the third largest revenue generating industry in Pakistan by paying Rs 500 billion taxes to the government.

“The government should save the government revenue and immediately remove the tax exemption given to FATA and PATA for the survival of the Ghee industry”, he demanded.

Pakistan’s ghee industry has come to the edge of collapse and many mills have closed down, while it has become very difficult for the rest to continue business.

Copyright Business Recorder, 2024