The pharma industry has announced a five-day shutdown of all facilities and production units due to the Federal Board of Revenue’s (FBR) refusal to issue sales tax refunds of 17 percent tax paid on raw material imports at the import stage.
Pharmaceuticals Manufacturing Association (PPMA) Chairman Qazi Mansoor Dilawar remarked in a statement issued on Monday that the FBR is forcing the industry to shut down all manufacturing units, resulting in a shortage of life-saving pharmaceuticals and medicines in all cities across the country.
Under the mini-budget, the FBR began collecting sales tax on the import of pharmaceutical raw materials used in the manufacture of medications from January 16, 2022.
The government has agreed with the sector that refunds will be granted based on purchases and immediately following payment of the 17 percent sales tax on active pharmaceutical ingredients imports.
“The FBR’s FASTER-Pharma rules, issued on March 7, 2022, are not in line with the legal basis.” These are illegal and must be repealed immediately, according to Chairman PPMA.
The FBR agreed to evaluate the refund payment method, but no amended or revised guidelines have been issued, despite the fact that 17 percent sales tax has been paid on the import of pharmaceutical raw materials used in the manufacturing of medications.
The pharma industry prefers refunds based on “purchases” rather than consumption. If the FBR keeps its word, the industry is ready to rescind its strike call and close down the manufacturing plants, according to Chairman PPMA.
A few days ago, the sector also gave the government a five-day deadline to withdraw sales tax on the import of raw materials/inputs or grant refunds at the purchase stage, or the industry would go on strike. As a result, the country’s medicines would be in short supply. Furthermore, the prices of the drugs would be raised.
Chairman Qazi Mansoor Dilawar urged that the FBR must immediately repeal the “FASTER-Pharma” guidelines. The FBR issued SRO 383 (1)/2022 to alert the pharma industry of the new consumption-based reimbursements through revisions to the Sales Tax Rules, 2006.
Consumption-based reimbursements are granted following the manufacturing and ultimate provision of completed products, such as medications, to the market. The PPMA is not seeking any concessions.
The current law entitled to a refund based on purchases rather than usage, and the FBR cannot act outside of the law, according to the group.
To read our blog on “Pakistan seeks access to US markets for pharmaceuticals and IT firms,” click here.
