Govt Urged to Stop Collecting Sales Tax on Imported Tractor Parts

October 17, 2018: Director General Pakistan Automotive Manufacturers Association Abdul Waheed Khan has drawn the attention of Federal Finance Minister, Asad Umar, towards huge refunds of Tractor manufacturers amounting to over Rs.5 billion that have been held back by the FBR since April 2018.

In a letter written to Asad Umar, he said that this huge amount has created a liquidity crunch among the tractor companies. The root cause of this continuous accrual of sales tax refunds is an anomaly that sales tax @ 17% is being charged on imported tractor parts at import stage, which always results in refunds later as sales tax on tractors is 5%, thus creating huge financial issue.

“This has resulted in slowdown of production activities in the two largest tractor manufacturing plants of the country and the delay in delivery is causing distress among the farmers,” he added.

Khan informed the Finance Minister that our member companies are quoted on Pakistan Stock Exchange, with shares owned by foreign direct investors and holding companies like Al-Futtaim Industries Company LLC, U.A.E, International Fund Manager, the holding CNH Global N.V., Netherlands etc. and the situation is causing unease to the foreign investors and shareholders.

Abdul Waheed said that PAMA has been pointing out this anomaly since long. He urged the Finance Minister for immediate liquidation of pending refund claims and also to do away with the sales tax on tractor parts at import stage, which in any case, is always supposed to be refunded, therefore, there is no point in collecting the same.