PESHAWAR: The computer industry has proposed the Federal Board of Revenue (FBR) to abolish 17 percent sales tax on component parts assembled inside the computers in the budget 2017-18 to practically benefit from last year’s concessions of zero-sale tax regime on imports and supply of computer/laptops.
According to the budget proposals of the Pakistan Computer Association (PCA) submitted to the FBR for 2017-18, the FBR has granted exemption from sales tax to laptops and personal computers in last budget to promote genuine imports and render informal and illegal imports as uncompetitive.
However, parts/components assembled inside the computers remained subject to 17 percent sales tax. This has created a serious distortion in the system and actual benefit of the concession has not been available to the computer vendors.
In order to remove the distortion, the FBR must abolish 17 percent sales tax on components/parts assembled inside the computers in budget 2017-18.
The PCA asked as to how exemption regime can work when all parts and components remain subject to 17 percent sales tax but only finished item i.e computers are exempted from sales tax.
The IT industry is at present faced with the imposition of 17% sales tax being charged on the component/parts assembled inside the computers.
The promotion of the information technology in countries like China, Vietnam, Portugal and Argentina is linked to the growth of their local IT assembling industries.
Pakistan has the potential to do the same and the aforesaid recommendations will serve as guidelines to accelerate the prospects and improvements of the IT industry with a greater impact on national economy.
The products are mainly sold at the retail shops and there is no trend of sales tax, so revenue can be compensated by increasing the duty.
The benefits also included saving of foreign exchange, lesser reliance on foreign countries to fulfill local needs, potential emergence of viable specialised logistics catering to manufacturing companies, wide-spread utilisation of IT due to affordability of locally assembled products and respectability of products of Industry & association of quality with local products.
