PESHAWAR: The Pakistan Business Forum (PBF) has demanded withdrawal of the tax exemptions granted to industries in former Fata and Pata (provincially-administered tribal areas).

The tax incentives package introduced in 2019 has created a significant disparity of around 27% in taxes between units in former Fata and the rest of Pakistan, the forum’s Khyber Pakhtunkhwa chairman Mohammad Ashafque Paracha noted in a statement issued here on Tuesday.

As a result, he said ghee and edible oil units in exempted areas were importing excessive quantities of oils, and selling their produce in mainland Pakistan, causing harm to local industries. Mr Paracha urged the government to abolish these exemptions in the budget to ensure a level playing field for all industries in Pakistan.

He highlighted that the concessions granted to units operating in the tribal districts included complete exemption from income tax, sales tax (both at local and import stages), customs duty (at import stages on plant and machinery), turnover tax exemption from annual tax returns, and exemption from withholding income tax on local supplies.

The PBF official said with a total population of around 6.25 million, the requirement of ghee and edible oil in former Fata and Pata was around 52,000 tonnes during the Jan-May 2024 period based on per capita consumption of 20kg annually. “But the ghee units in these areas have already imported 180,000 tonnes of edible oil, including palm oil, in five months,” he said, adding this clearly showed that the ghee and oil mills of exempted areas had been selling their produce in mainland Pakistan even up to Punjab and parts of Sindh during the past five years.

Mr Paracha said most of steel units in Hattar, Gadoon and Hayatabad industrial estates had been closed down with 16 units closed in Hattar and eight in Islamabad.

He emphasised that the current situation was not only hurting local industries but also deterring foreign investment as evident from the shelving of CPEC-related steel projects at Rashakai Economic Zone.

Published in Dawn, June 12th, 2024