In the 2019 budget, the Pakistani government is considering reducing the pharmaceutical sector’s sales tax distortion (2022-23).
One of the suggestions under consideration, according to sources, is to lower the sales tax rate or eliminate the 17 percent general sales tax imposed by the previous government on raw materials used in the creation of completed products, such as medications. It’s possible that the local supply will remain zero-rated.
The pharmaceutical industry has requested a zero-rated sales tax reduction from 17 percent to 5% on pharma raw materials, with the Federal Board of Revenue (FBR) having the authority to levy a 5% sales tax on finished items.
In light of recommendations made by the Pakistan Pharmaceuticals Manufacturing Association, the FBR’s “Issues Resolution Committee” has decided to settle sales tax refunds related issues of pharmaceutical companies during the budget (2022-23). (PPMA).
The “Difficulties Resolution Committee,” chaired by Chief Commissioner-IR, LTO, Karachi, and made up of senior FBR officers, is responsible for resolving pharmaceutical company issues.
The Pakistan Pharmaceutical Manufacturers’ Association (PPMA) has notified Prime Minister Shahbaz Sharif that the previous government’s decision to levy a 17 percent sales tax on raw materials used by medication manufacturers had jeopardized the country’s capacity to obtain crucial drugs.
The country’s drug producers had been lobbying on this single topic for the past four months, but the previous government refused to budge and stuck to its unjust judgement.
The PPMA’s members’ best efforts to continue producing crucial medicines for the country’s suffering inhabitants had been hampered by taxation.
The country’s pharmaceutical manufacturers expect the government to reciprocate by removing any unfair taxes on drug production. The pharmaceutical sector demanded that the tax be repealed or that it be made refundable on a purchase basis.
There is no risk of the active pharmaceutical raw ingredients imported only for the manufacture of medications being misappropriated. If refunds on a purchase basis are not available, refunds on raw materials and inputs will be paid on a purchase basis, with the remaining refunds on packaging material being paid on a ‘consumption basis.’
The Complaint Resolution Committee’s Terms of Reference (TOR) comprised an assessment of the nature of the issue, viable remedies, and taking prompt action to resolve it.
The committee would follow up with the affected field formations until the issue was resolved, as well as keep a thorough record of issues, the procedure used to resolve them, and any post-resolution action that was required.
The committee would provide data with the Board on a monthly basis, according to the FBR’s TORs, noting issues received, issues resolved, and issues pending for resolution and reasons for pendency.