The pharmaceutical industry has asked the Federal Board of Revenue (FBR) to pay outstanding sales tax refunds of Rs. 40 billion on a fast-track basis warning that the country would face a severe shortage of medicines otherwise.
Chairman Pakistan Pharmaceutical Manufacturers Association (PPMA) Qazi Mansoor Dilawar informed the media at a press conference on Thursday that sales tax refunds of Rs. 40 billion have to be paid by the FBR due to the imposition of a 17 percent sales tax on inputs and raw materials of the medicines and drugs. The FBR made a commitment to pay the refunds in 48 hours but in vain.
Dilawar said that government should immediately abolish the 17 percent sales tax on the import of raw materials and zero-rate the same. He informed the media that the industry wants refunds based on purchases and not consumption.
PPMA has further demanded the government to allow an increase in the minimum retail price of drugs by 20-25 percent given the increase in prices of raw materials, cost of packaging, transportation cost, rupee-dollar parity, and increase in prices of utilities.
PPMA Chairman stated that the shortage of raw materials and input of the drugs and medicines has started in the country due to cash flow problems. In Pakistan, 95 percent of the raw materials are imported as compared to India where 60-70 percent of the pharma raw materials are locally manufactured.
He said that during the last two years the prices of the raw materials have considerably gone up and the companies cannot purchase the raw materials used in the manufacturing of the medicines. He said that pharmaceutical companies have run out of raw materials, which will result in up to 50 percent shortage of medicines from next month.
Usman Shaukat from PPMA warned of a crisis-like situation and a severe shortage of lifesaving drugs following the high cost of inputs/raw materials due to 17 percent sales tax and non-payment of sales tax refunds. He said that FBR would be responsible for this situation in the pharmaceutical sector, as they are not ready to understand the genuine and legal issues of the industry.