KARACHI, May 2: Shipping agents have urged the government to withdraw 15 per cent central excise duty (CED) imposed last year on their export commission from non-resident principals. In a representation dispatched to budget makers the shipping agents pointed out that this is a major disadvantage to their non-resident shipping principals who are already paying eight per cent tax on gross freight as well as on terminal handling charges as per section 7 of the Income Tax Ordinance 2001.
The government imposed the CED through an amendment made in the Finance Bill 2004, by issuing SRO 504(1).2004 dated June 12, 2004, making it mandatory upon every shipping agent to charge, collect and pay the central excise duty at the rate of 15 per cent of value of excisable services, which will be the commission charged by an agent on the net ocean freight amount of c & f export cargo for such services provided or rendered by him.
It has been further stated that commission earning in the hands of agents is also subject to tax at applicable rate, which is 41 per cent under Income Tax Regime. Thus the proposed levy results in multiple taxes on the same income. The founder chairman All Pakistan Shipping Association (APSA) Mohammad Farrukh Qaisar in his representation, therefore, requested the authorities to withdraw this amendment from the Finance Bill 2004.
He said that the imposition of 15 per cent CED has put the shipping lines under pressure because of a heavy burden of taxes and it has become unbearable for them especially after the 9/11 developments.
The business of shipping industry, Mr Qaisar said, had been adversely affected, therefore the government of Pakistan was urged to rescue the shipping lines as the heavy taxation of 15 per cent of CED in the Sales Tax Regime had not only brought a negative impact on the business of the shipping lines but it also hurt the export sector and industry.
He cautioned that if the government fails to respond positively to these demands, the shipping lines may resort to reduction in quality of service offered or impose other charges to recover the losses which would cause difficulty for exports of the country.
All such developments Mr Mohammad Farrukh Qaisar said would adversely affect the external trade of the country which is poised to grow and reach at around $32 billion in coming years.
He requested the policy makers to include APSA’s demand in the forthcoming federal budget for financial year 2005-06 in order to remove the hardships being faced by trade and industry and the port and shipping sectors.