The pharmaceutical industry has announced to shut down all factories and manufacturing plants after five days due to the Federal Board of Revenue’s (FBR) failure of issuing sales tax refunds of 17 percent tax paid on the import of raw materials at the import stage.
In a statement issued on Monday, Pharmaceuticals Manufacturing Association (PPMA) Chairman Qazi Mansoor Dilawar stated that the FBR is forcing the industry to shut down all manufacturing units which would result in a shortage of life-saving drugs and medicines in all cities of the country.
The FBR has started collecting sales tax on the import of pharmaceutical raw materials used in the manufacturing of medicines from January 16, 2022, under the mini-budget.
The government has made a commitment with the industry that the refunds would be issued on the basis of purchases and immediately after payment of 17 percent sales tax on the imports of active pharmaceutical ingredients.
“FASTER-Pharma rules issued on March 7, 2022, by the FBR are not in line with the legal basis”. These are against the law and must be rescinded, immediately, Chairman PPMA stated.
The FBR had promised to reconsider the system of refund payments, but no amended or revised rules have been issued, as 17 percent sales tax has been paid on the import of pharmaceutical raw materials used in the manufacturing of medicines.
The industry wants refunds on the basis of “purchases” and not consumption-based. If the FBR fulfills its promise, the industry is ready to take back its strike call and shutter down the manufacturing units, Chairman PPMA said.
A few days back, the industry has also given five days ultimatum to the government to withdraw sales tax on the import of raw materials/inputs or issue refunds at the purchases stage or the industry will go on strike. This would result in a shortage of medicines in the country. Moreover, the prices of the drugs would also be increased.
Chairman Qazi Mansoor Dilawar stated that the FBR must rescind the “FASTER-Pharma” rules immediately. The FBR had issued SRO 383 (1)/2022 to notify the new consumption-based refunds to the pharmaceutical sector through amendments to the Sales Tax Rules, 2006.
The consumption-based refunds are issued after manufacturing and final supply of the finished products, i.e., medicines in the market. PPMA is not asking for any concession. It is the present law that entitles the refund on the basis of purchases, not consumption, and FBR cannot act anything beyond the law, the association added.
