IAP welcomes imposition of 10% sales tax in ex-FATA/PATA
Staff Reporter
PESHAWAR: The Industrialists’ Association Peshawar (IAP) welcomes the Federal Government’s decision to impose a 10% sales tax up from 0% on goods manufactured in the ex-FATA/PATA regions. This long-awaited step addresses part of the tax disparity that has severely impacted industrial competitiveness in Khyber Pakhtunkhwa’s settled districts.
In a press release, President IAP states that despite this partial progress, IAP maintains that the measure remains insufficient. In a recent meeting with Finance Minister, Muhammad Aurangzeb and Minister for Energy, Ali Pervaiz Malik at the Sarhad Chamber of Commerce and Industry, the business community unanimously demanded full withdrawal of all six federal tax exemptions still in place for ex-FATA/PATA. To date, only one exemption – sales tax on goods has seen partial implementation.
He adds that while the government proposes to gradually raise the rate by 2% annually, IAP insists on immediate enforcement of the standard 18% rate to restore competitive balance. The continued preferential tax treatment of ex-FATA/PATA threatens industrial stability in taxed zones such as Hayatabad, Rashakai, Gadoon, and Mardan.
Foreign investors, including China Century Steel Mills (Pvt.) Ltd., has signaled potential withdrawal due to ongoing disparities. The consequences are already visible: the official record cites 241 industrial closures, but IAP estimates the real figure to be threefold, he maintains, adding that it is important to note that while KPRA collects sales tax on services in ex-FATA/PATA since October 2022, the authority to implement sales tax on goods and income tax lies solely with the Federal Government.
The IAP urges swift and full-scale federal intervention to correct this imbalance and protect the future of KP’s industrial landscape, he concludes.
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