ECONOMIC TIMES OF PAKISTAN.

Byline: S.KAMAL HAYDER KAZMI

FOR DAIRY PRODUCTS: GOVERNMENT MULLS ZERORATED FACILITY

The government has set up a committee to review a budget proposal seeking zero sales tax on milk products as blindsided taxation policies of the previous government have caused heavy losses to dairy companies due to increase in cost of doing business.

The increase in interest rate during the Pakistan TehreekeInsaf (PTI) government also adversely affected their balance sheets.

The committee would be chaired by the finance secretary and would analyse financial statements of dairy firms aimed at evaluating claims of business losses due to the withdrawal of zerorated sales tax facility by the previous Pakistan Muslim LeagueNawaz (PMLN) government.

The dairy sector was one of the worst hit sectors during the PMLN tenure as the previous government thrice changed taxation policies for the sector.

Adviser to Prime Minister on Finance and Revenue Abdul Hafeez Shaikh held a meeting with members of the Pakistan Dairy Association (PDA) via video link.

The finance adviser directed that a special committee may be constituted under the chairmanship of finance secretary with representatives from the Federal Board of Revenue (FBR) and the dairy industry, according to the finance ministry.

The committee would give its report within a fortnight and would provide information about the profit and loss situation of the dairy business across the country, said the finance ministry. PDA has claimed that its 30 percent capacity remains unutilised and restoration of the pre2017 taxation status will help it enhance the business.

The government would consider the request of the dairy association with an open mind after reviewing all the facts and related data that could help in taking the best decision in favour of the economy and wellbeing of the people, said Shaikh. The dairy sector has been on the decline since the abolitionof the zerorated facility. In 2006, the then government declared dairy a zerorated sector where any sales tax paid by the sector was refundable.

Through Finance Acts of 2015 and 2016, the sales tax zerorated status had been abolished. The last government imposed 10 percent sales tax on concentrated powder milk, cream, yogurt, cheese, butter, whey, UHT and fatfilled milk. In 2019, three major companies registered a reduction in their profits and some had been booking losses. Friesland Campina, which acquired a majority stake in Engro Foods, sustained a Rs955million loss after tax.

Nestle Foods earned profit of Rs7.4 billion last year but it was 50 percent or Rs7.3 billion less than the 2017 earnings when the government abolished the zerorated facility. Excluding revenues from sales of other products, Nestle is also booking losses in its milk operations.

Fauji Foods sustained a loss after tax...

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