The ghee and cooking oil industry has submitted a set of tax-related recommendations to Finance Minister Shaukat Tarin for immediately improving domestic stocks of edible oil, which at present at an all-time low.

In a communication to the finance minister and the chairman Federal Board of Revenue (FBR) here on Tuesday, the Pakistan Vanaspati Manufacturers Association (PVMA) Chairman, Tariq Ullah Sufi, highlighted issues of the edible oil sector of Pakistan.

He informed that in the wake of highly volatile international commodity market and un-satisfactory/depleting domestic stock level of edible oil, looming shortage of ghee/cooking oil in the coming months cannot be ruled out. Therefore, the participants unanimously resolved as under to counter the prevailing un-sustainable circumstances with respect to depleting domestic edible oil stocks: The applicability of Section 8 B (1) of Sales Tax Act, 1990 for the purpose of sales tax input adjustment up to 90 percent to be suspended and allow 100 percent sales tax input adjustment till 30th June 2022, in order to improve the cash flow situation of importers-cum-manufacturers of edible oil, since the prices have surged to around US$1,750 per metric ton (PMT) C&F.

To mitigate the impact of duties and sales tax on the current exorbitantly high prices of edible oils, it is proposed that Import Tariff Price (ITP) of edible oil products i.e. crude palm oil (CPO), RBD palm oil, RBD Palm Olein, sunflower oil, and crude degummed soybean oil (CDSO) to be set at an average price prevailed during 1st July 2021 till 31st January 2022 for the purpose of levying duties/sales tax/other taxes at import stage.

This will help in reducing the incidence of duties/sales tax and will enable the industry to improve their cash flow, which is imperative in the current market scenario. The mutually calculated and agreed ITP or actual international market price (whichever is lower at the time of import for the purpose of calculating duty/taxes) to come into force immediately and will be valid till 30th June 2022, the chairman PVMA maintained.

The chairman PVMA stated that the government will review the import volume by the FATA/PATA Units as there has been huge distortion between their import volume and consumption pattern.

Pakistan Per Capita Consumption is 20kgs and the import volume of FATA/PATA has to be linked with the population official figures available in the Pakistan Economic Survey.

It was also proposed that all import levies/sales tax for the FATA/PATA Units should also be collected at import stage and refund to be made after getting their Consumption Certificate duly scrutinised and verified.

To promote the culture of Ease of Doing Business and building confidence among the importers/manufacturers/refiners, coercive attitude/actions may be done away with and the Competition Commission of Pakistan (CCP) and the Federal Board of Revenue (FBR) may be directed to avoid issuing coercive notices.

Tariq Ullah Sufi added that measures need to be taken to curb the influx of Iranian-origin cooking oil smuggled into Pakistan, which is not only depriving the necessary duty to the government but also compromising the level playing field.

The story was originally published in Business Recorder on March 2, 2022.