KARACHI: The Pakistan Chemicals & Dyes Merchants Association (PCDMA) has voiced significant concerns regarding the federal government's recent policy change permitting manufacturers to sell up to 50% of imported raw materials in the local market without value addition. The association argues that this decision legitimizes the exploitation of export-related industrial concessions.

According to Pakistan Chemicals and Dyes Merchants Association, PCDMA Chairman Salim Valimuhammad emphasized that raw materials imported under concessionary tax and duty schemes, intended solely for export-oriented production, should not be diverted to the domestic market. He highlighted that the new provision in the Sales Tax Act, introduced through the federal budget, contradicts the goal of facilitating exports. This policy, he asserted, provides legal grounds for the misuse of concessionary imports in the local market, thereby disadvantaging genuine commercial importers who adhere to the full range of taxes, duties, and levies.

Mr. Valimuhammad underscored that the principle of allowing any percentage of resale is flawed, as all concessionary imported raw materials should be exclusively used for export production. He called for the government to replace the existing 50% resale cap with a complete ban on the domestic sale of these materials. The PCDMA also urged the Federal Board of Revenue (FBR) to conduct an impartial crackdown on those misusing industrial concessions.

The PCDMA chairman pointed out the long-standing disparities in tax treatment between commercial importers and industrial manufacturers, which have distorted competition in Pakistan's chemicals and dyes sector. He noted that commercial importers face higher tax burdens compared to some industrial units benefiting from concessionary imports that are later diverted into the local market.

Mr. Valimuhammad dismissed the notion that the 50% cap would solve the issue, advocating instead for a uniform import tax regime applicable to all importers. He argued that such reforms would eliminate tax distortions, promote fair competition, and support the supply chain for SMEs. The PCDMA urged the federal government and the FBR to implement comprehensive reforms to safeguard the interests of the trading community and bolster Pakistan's documented economy.