The Federal Board of Revenue (FBR) is reviewing a budget proposal of the Engineering Development Board (EDB) seeking compulsory sales tax registration of Engineering, Procurement, Construction (EPC) companies with the Sales Tax Department from 2014-15. Sources told Business Recorder here on Thursday that the budget proposal of the EDB is related to the sales tax registration of the said companies from next fiscal year.
The local manufacturing capabilities have proven records to substitute EPC/clients' international procurement of heavy engineering products with domestic ones. For EPC projects, it should be made mandatory for owner of the project/EPC companies to award 30 percent of the project's mechanical work to local recognised manufacturers in Pakistan.
Presently, the EPC Companies are not sales tax registered and as such they prefer to outsource their projects through imports to get the benefit of Sales Tax exemption whereas, the Sales Tax becomes a cost for the local industry and thus are priced out off the competition. It is strongly proposed that the EPC companies should be registered with Sales Tax regime in accordance with Pakistan Engineering Council (PEC) Rules for the civil construction companies, the EDB added.
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