Pakistan’s shipbreakers threaten tax-related stoppage

Pakistan – Dewan Rizwan Farooqui, chairman of the Pakistan Ship Breaker’s Association, is planning a protest against the Federal Board of Revenue (FBR), claiming that discriminatory tax treatment has ‘made it difficult to continue our business activities’. And he has warned: ‘If our demands are not met, we will stop our operation.’According to the association, the sales tax for shipbreakers has risen 23% and has created huge losses whereas smelters’ sales tax has been greatly reduced. Farooqui claims the nation’€™s former finance minister Saleem Mandviwala had agreed that the industry would pay sales tax at the time of clearance and that the income tax rate would be 2.75%.

‘However, regarding the reduced income tax rate at the import stage, the FBR is now refusing to honour the commitment made by the finance minister,’ the chairman says. This ‘injustice’ means the shipbreaking industry has become uncompetitive compared with other melting sectors which are ‘still enjoying the tax benefits’, he adds.

Pakistan’s steel consumption amounts to roughly 4 million tonnes per annum, of which the shipbreaking sector is said to meet 20% of the total. Some 32 active shipbreaking units have paid more than Pakistani rupee 1.5 billion worth of income tax as well as Pakistani rupee 14 billion sales tax over the last four years, according to Farooqui.

‘We do not want any confrontation with the government and protest will be peaceful,’ he asserts. ‘But in case the government does not pay attention to our voice, we will have no other option but to stop work.’