Karachi, May 20, 2024 – The Karachi Chamber of Commerce and Industry (KCCI) has urged the government to grant a sales tax exemption on the import of gold for export purposes.
In its proposals for the 2024-25 budget, the KCCI highlighted that the import of precious metals, including gold under PCT 99.29, is currently not exempted from sales tax under the Sales Tax Act.
Although the Import Policy Order (IPO) SRO 760(I)/2013 provided a sales tax exemption for such imports, the Federal Board of Revenue (FBR) has not amended the Sales Tax Act to reflect this exemption. This discrepancy has created significant operational challenges for the export sector. Specifically, the lack of a sales tax exemption necessitates the manual filing of Goods Declaration (GD) when importing metal under SRO 760, resulting in a demand for 18 percent sales tax.
This tax requirement, raised in the customs system, has effectively brought the entire export sector to a standstill since February 22, 2024. Exporters have faced severe disruptions, as the imposition of this tax has halted their operations and adversely affected their ability to compete in the global market.
To address this issue, the KCCI has proposed amending the Sales Tax Act to include PCT 99.29 in the Sixth Schedule, Clause 167, which pertains to exempted gold and other precious metals. This amendment would formally grant the sales tax exemption for gold imported under SRO 760 for subsequent exportation.
In addition to the amendment of the Sales Tax Act, the KCCI has also recommended a corresponding entry in the Customs Tariff Act to ensure consistency and streamline the process for exporters. Such a change would eliminate the need for manual filing of GDs and prevent the automatic imposition of the 18 percent sales tax, thereby facilitating smoother and more efficient operations within the export sector.
The KCCI emphasized that these changes are crucial for the sustainability and growth of Pakistan’s export sector. By removing the sales tax burden on imported gold for export purposes, exporters would be better positioned to compete internationally, thereby boosting the country’s economic performance and foreign exchange earnings.
The KCCI’s proposals underscore the importance of aligning the Sales Tax Act with existing import policies to support the export sector effectively. As the government prepares the budget for the upcoming fiscal year, these recommendations aim to ensure that Pakistan’s exporters can operate without unnecessary financial burdens, promoting greater economic stability and growth.
