The Pakistan Business Forum (PBF) criticizing the unfair competitive advantage granted to industries in former FATA and PATA which is devastating industries across the country has said the tax incentives package introduced in 2019 has created a significant disparity of around 27% in taxes between units in former FATA and the rest of the country. As a result, ghee and edible oil units in exempted areas are importing excessive quantities (180,000 tonnes in just five months) and selling their produce in mainland Pakistan, causing harm to local industries. Moreover, numerous steel units have been forced to shut down, including 16 in Hattar industrial estate, and 8 in Islamabad. The PBF urged the government to abolish these exemptions to ensure a level playing field for all industries in Pakistan in the budget.

Chairman PBF Khyber Pakhtunkhwa, Muhammad Ashfaque Paracha demanded the government to abolish the exemptions awarded to the industry in former FATA and the Provincially Administered Tribal Areas (PATA) for five years. He highlighted that the concessions granted to FATA included complete exemptions from income tax, sales tax (both at local and import stages), customs duty (at import stages on plant and machinery), turnover tax exemption from annual tax returns, and exemption from withholding income tax on local supplies. “As a result, there is a difference of around 27% between the units in former FATA and the rest of the country,” Paracha added. Ashfaque Paracha informed that with a total population of around 6.25 million, the requirement of ghee and edible oil in former FATA and PATA should be around 52,000 tonnes during Jan-May 2024 based on per capita consumption of 20kgs annually.

“But the ghee units in these exempted areas have already imported 180,000 tonnes of edible oil including palm oil in five months,” he said, adding, “This clearly shows that the ghee and oil mills of exempted areas have been selling their produce in mainland Pakistan even up to Punjab and parts of Sindh during the past five years.” Similar most of the steel units working in Hattar industrial estate, Gadoon industrial estate, and Hayatabad industrial estate have shut down, with 16 steel units closed in Hattar industrial estate, Khyber-Pakhtunkhwa and eight in Islamabad. PBF KPK chairman Ashfaque Paracha, further emphasized that the current situation was not only hurting local industries but also deterring foreign investment, as evident from the shelving of CPEC-related steel projects at Rashakai Economic Zone.

Credit: Independent News Pakistan