KARACHI: Al-Ghazi Tractors Ltd (AGTL) has renewed its industrial collaboration agreement with CNH Industrial Italia for the next 10 years to assemble and sell New Holland CNHI tractors in Pakistan.AGTL in a filing with the Pakistan Stock Ex­­change (PSX) on Wednes­day stated that that under the new agreement the company would also export tractors to Afghanistan.

Recently a delegation from the tractor industry met Haroon Akhtar, Special Assistant to the Prime Minister on Revenue, requesting him to consider their proposal to rationalise the rate of input tax on purchases of components by tractor manufacturers to match the output rate.

This would help the industry to reduce yearly refunds to the tune of Rs1 billion. As sales tax on imports is directly collected by the government at the import stage and no other intermediaries are involved, therefore it is advisable for the authorities to implement this measure; avoiding the hassle of refund processing, suggested the tractor industry to the special adviser.

Agricultural tractors are subjected to sales tax at the rate of five per cent whereas on procurement of required parts, both locally as well as imported, sales tax at standard rate of 17pc is levied; consequently, in one unit of tractor the amount of input tax is always higher than the output tax.

The outcome is an anomaly on perpetual basis such that refunds are consistently accruing and increasing on a regular basis, tractor makers informed Mr Akhtar.

Pakistan Automotive Manufacturers Association (PAMA) had already requested the government to abolish customs duty, additional customs duty, and reduce the rate of input tax on tractors.

Published in Dawn, May 18th, 2017