Islamabad, Oct 4: Government Incurring Rs. 8 Billion Monthly Loss Due to FBR’s Delay in Implementing 18% Tax on Steel Furnaces. The failure of the Federal Board of collection (FBR) to impose an 18% sales tax on steel furnaces that use scrap that is supplied locally has resulted in the loss of Rs. 8 billion in tax collection per month.
Registered companies utilizing imported raw material are paying the lump-sum 18 percent tax on steel furnaces but FBR has yet to issue the requisite SRO to force tax-evading enterprises to pay the same amount.
For the first quarter of the current fiscal year, there will be a shortfall in tax revenue for the government of Rs. 90 billion. Industry leaders believe that whilst enterprises utilizing local scrap pay significantly less in taxes per ton of billet, some using imported scrap spend about Rs. 40,500 in taxes.
As a result of tax evaders undercutting retail prices, there is a major shortage in tax collection, and tax-compliant steel companies have suffered massive losses. This is according to Javaid Mughal, Chairman of Mughal Steel.
Mughal claimed that two steel factories in Karachi had closed because they were unable to compete with furnaces that evaded taxes. He said that the 18% tax would reduce illicit trade in addition to helping FBR realize an extra Rs. 85–100 billion yearly.
