The Federal Board of Revenue (FBR) assessed the draft bill for the withdrawal of sales tax exemptions and zero-rating worth Rs. 350 billion.
Business Recorder reported that the top officials of the tax machinery met at the FBR headquarters to review the draft of the Tax Laws (Fourth) Amendment Bill, 2021. The officials evaluated all the aspects of the draft which has already been approved by the Law Division in detail.
According to the Exemption Schedule of the Sales Tax Act of 1990, the sales tax exemption on the import of machinery, equipment, and other items by Chinese enterprises will remain. Moreover, the sales tax exemption on electricity will be maintained until 30 June 2023 for all the residential and commercial users in the tribal areas, as well for the tribal industries that were established and began industrial production before 31 May 2018, excluding the steel and cooking oil industries.
The subject of the sales tax exemption on the local suppliers of pharmaceuticals after the imposition of sales tax on pharmaceutical raw materials was also discussed during the meeting, and two approaches are being considered in this regard. First, the government intends to levy a 17 percent sales tax on the import of the raw materials that are used in making medicines. The second idea is to cut this sales tax while exempting the local supply and end products.
The FBR officials also suggested levying sales tax on the import and supply of iodized salt bearing brand names and trademarks regardless of whether they are supplied in retail packaging.
Furthermore, the Rs. 250 sales tax on Subscriber Identification Module (SIM) cards might not change.
The attendees of the meeting also decided that the sales tax exemption will be maintained for the next four decades on the goods and equipment imported by or provided to the China Overseas Ports Holding Company Limited (COPHCL) and its operating firms for the construction and operation of Gwadar Port and the development of the Gwadar Port Free Zone.
In principle, the sales tax exemption is scheduled to continue on imports and exports of machinery, equipment, materials, and goods for use within the Gwadar Free Zone. The limitations and restrictions imposed on such products by the Customs Act, 1969 (Act IV of 1969) and its rules will be applicable, provided that any such good is carried out of the Zone for a purpose other than export, and the importer is obligated to pay tax.
