Karachi: The Pakistan Chemicals & Dyes Merchants Association (PCDMA) has voiced concerns over a government policy allowing manufacturers to sell up to 50% of imported raw materials in the local market without value addition, arguing that this move legitimizes the misuse of export-related industrial concessions.

According to Pakistan Chemicals and Dyes Merchants Association, PCDMA Chairman Salim Valimuhammad stated that raw materials imported under concessionary tax and duty schemes intended for export-oriented production should not be permitted for domestic sale. Mr. Valimuhammad criticized a new provision in the Sales Tax Act that enables manufacturers to sell up to 50% of imported raw materials without processing, asserting that it undermines commercial importers who pay full taxes and duties.

Mr. Valimuhammad emphasized that raw materials under export incentive schemes should solely be used for value addition and exports. He stated that allowing any percentage of these imports for domestic sale contradicts the purpose of such incentives and creates unfair competition. He called for a complete ban on the domestic sale of concessionary imported raw materials and urged the Federal Board of Revenue (FBR) to enforce strict measures against the misuse of industrial concessions.

Highlighting the tax disparity between commercial importers and industrial manufacturers, Mr. Valimuhammad noted that while commercial importers pay higher taxes, some industrial units benefit from concessionary imports and divert them into the domestic market without value addition. This practice, he claimed, harms tax-compliant importers and deprives the national exchequer of revenue.

Rejecting the notion that the 50% cap resolves the issue, Mr. Valimuhammad advocated for a uniform import tax regime to eliminate tax distortions, ensure equal business opportunities, and promote fair competition. He urged the government and the FBR to implement comprehensive reforms, strict enforcement measures, and effective oversight to protect the trading community and strengthen Pakistan's economy.