ReneSola Pakistan, a joint venture between the ACT Group and Chinese solar panel manufacturer ReneSola, has appealed to the Pakistani government to eliminate duties and taxes on components and manufacturing equipment used in the local production of solar PV panels.
The company argues that this is crucial to ensure a level playing field with imported panels, which currently enjoy tax exemptions.
In a letter to the Secretary of the Sindh Investment Facilitation Council (SIFC), Jamil Qureshi, the CEO of ReneSola Pakistan highlighted the company’s commitment to establishing a solar panel assembly facility at Port Qasim in Karachi. The facility, which is in its advanced stages of development, is expected to produce 750 MW of panels in Phase 1, an additional 750 MW in Phase 2, and 2 GW of solar cells in Phase 3. The company has set a minimum export target of 50% of the total capacity.
ReneSola Pakistan’s request stems from an inconsistency in the current tax structure. While imported solar panels are exempt from both customs duty and sales tax, most components used in the manufacturing process are subject to an 18% sales tax. This disparity creates a significant disadvantage for local manufacturers, making their products less competitive.
Furthermore, equipment imported for the manufacturing of solar panels and cells also faces an 18% sales tax, further adding to the cost burden for local manufacturers. The company argues that these taxes create a non-adjustable cost of manufacturing, hindering their ability to compete effectively.
To address this issue, ReneSola Pakistan has proposed a long-term solar panel manufacturing policy for Pakistan. The policy includes streamlined sales tax and duty structure including implementing a clear and consistent sales tax and duty structure for both panels and components, similar to the current tax-free status of imported panels. This would incentivize investment in the sector, potentially saving Pakistan $300-500 million in foreign exchange by year five and generating $300 million annually.
The company has also proposed Removing all sales taxes and duties on the import of machinery for the assembly of solar panels and the manufacture of components. This would further encourage investment and allow local manufacturers to compete effectively in both domestic and export markets.
ReneSola Pakistan is hopeful that the government will consider their recommendations and implement a policy that fosters a robust and competitive solar panel manufacturing industry in Pakistan.
