The business community of Azad Jammu and Kashmir (AJK) on Friday sought immediate relief from the Pakistan government for the survival of local industrial sector by calling for withdrawal of recent amendments made by the Federal Board of Revenue (FBR) in the tax laws for AJK.
The business fraternity feared complete collapse of business and industrial sector in the tax-exempted territory of AJK following the promulgation of a Statutory Regulatory Order (SRO) by the FBR, imposing sales tax on the supplies of taxable goods brought from tax-exempted areas into taxable areas, including the AJK.
The businessmen said that the SRO will undermine the industrial progress and socio-economic growth in the state.
With the SRO, issued on January 26, the FBR had added “Chapter X-A Supply From Tax Exempt Areas Application” in the Sales Tax Rules, 2006 and said that the provisions of the chapter shall apply to the supplies of taxable goods brought from tax-exempted areas into taxable areas.
Talking to reporters, the local business community leaders said that the AJK state is already lacking industries and required infrastructure in the industrial areas due to its particular geographical layout and lack of resources. “We strongly condemn this step and request the government of Pakistan to immediately intervene and withdraw the amendment in the tax laws,” they said.
“After investments in the industrial sector, the AJK government has developed Industrial estates in various places, particularly in Mirpur and Bhimbher, offering incentives, including tax exemptions, for newly-established industries with prime focus to boost the industrial activity. These industrial units have not only provided the employment opportunities for the skilled and unskilled manpower but also attractively contributed to the government exchequer in the form of due taxes.”
They further said that since the FBR has notified the SRO, mechanism to establish check posts and imposition of taxes as in other areas, all vehicles, carrying goods and entering Pakistan territory, will be checked for tax papers. As a result, the locally produced goods could not be entered into the territory of Pakistan and would be confiscated by the authorities due to the SRO.
“The enforcement of unilateral withdrawal of a facility will leave drastic effects on the industrial and economic activities in the industrial areas of AJK. The lack of infrastructure and resources was partially compensated by the incentive in the form of tax exemptions for AJK’s productions, but now the aforesaid drawbacks will have a negative impact, forcing industries to shut down their operations and turning the existing industrial areas into graveyards. That will also cause emerging of widespread unemployment and huge loss of revenue to the AJK government,” they said.
“It is also an issue of national importance as declaring the supply of AJK goods as import in Pakistan might create the sense of distancing the Kashmiri population from the national stream.”
