All Pakistan Ceramic Tiles Manufacturers (APCTM) pleaded the Federal Board of Revenue (FBR) not to include tiles industry in the Third Schedule of the Sales Tax Act 1990.
In this regard, representatives of the industry are meeting FBR Chairman Ansar Javed on Friday (today). Earlier, they had written a letter to the FBR chairman seeking his involvement in a very serious issue which had emerged after announcement of budget 2013-14, having a devastating impact on the ceramic tiles industry in Pakistan.
FBR had proposed to include tiles in the Third Schedule of the Sales Tax Act 1990 whereby it had been made mandatory to print retail price on each box of tiles. “The impact of the proposed amendment is fatal for survival of local manufacturers, therefore, we request you to please consider some factors before taking any final decision in this regard,” the letter to FBR chief stated.
A manufacturer has to produce new designs and varieties on a daily basis in line with newer varieties of imported tiles which are sold at different prices according to their respective manufacturing costs by importers who have larger share in the local market, they added.
Moreover, they added, there was a large number of importers involved in the import of tiles from various countries including China, Spain, UAE, Indonesia, Malaysia, Iran and many other countries but through the proposed amendment, FBR was trying to recover sales tax on full value addition up to retail level from local manufacturers only. “The commercial importers, possessing a major share in the domestic market, are not required to pay sales tax on retail price,” added the letter. They said FBR was trying to control prices of locally manufactured tiles but there was no mechanism available with FBR to track imported tiles, which meant the customer will switch over to imported tiles to enjoy flexibility in prices. “Also, commercial importers would immediately import huge quantities of tiles to grab share of local manufacturers, compelling them to completely shut down their operations,” the letter stated.
They said FBR should know that in the field of ceramic tiles, prices cannot be fixed for all customers because of the nature of customers who ask for discounts such as corporate discounts, bulk buying discounts, territory-wise discounts, and cash discounts. “The manufacturer gives all kinds of discounts to customers in order to retain them. There shall be complexity and disputes over quantum of discounts between sales tax department and manufacturers on a daily basis if this item is included in the Third Schedule,” the association stated in the letter.
“Tiles may not be treated like FMCG products and the practicality of printing of prices on retail packing may be considered before making any such amendment because tiles business is highly volatile and order-based, the dynamics of which change every day,” the letter added.
