In order to simplify the taxation process and facilitate sugar mills and Federal Board of Revenue, the Trading Corporation of Pakistan has decided to invite sugar procurement bids inclusive of taxes. Sources toldBusiness Recorder on Wednesday that with this move the FBR will get taxes on the procured sugar through a single tranche as per past practice the TCP was paying taxes in several tranches.
This will also simplify the process of taxation and procurement cost for the TCP as due to previous process the state run grain trader was facing some difficulties in calculating the actual cost of procured sugar. “Although, the TCP was making deals for the procurement of thousands of tons of sugar in a day, taxes on this procured sugar were being paid in several instalments at the time of lifting of sugar from mills. Mainly, the procured sugar is being supplied to Utility Stores Corporation, which lifts sugar as per its requirement and different phases,” they added.
Sources said after detailed discussion on the issue, the TCP management has decided to invite sugar procurement bids inclusive of taxes in order to pay complete taxes on the procured sugar through single tranche to the FBR and ease their own taxation system. Till the last procurement made in August 2013, the TCP had finalised deals at Rs 47,690 per ton that was without tax. Accordingly, the TCP had also paid only actual price of the commodity to mills, while taxes paid at the time of lifting of sugar.
Now, the TCP has decided to invite fresh bids inclusive of taxes and in the last sugar tender issued on September 18, 2013, the TCP has asked mills to submit bids including taxes. The tender was opened on Wednesday for the procurement of 50,000 tons of sugar from local mills. In response to TCP”s tender some 36 domestic mills participated in the bidding and quoted prices ranging between Rs 53,600 per ton (incl. taxes) to Rs 57,500 per ton (incl. taxes). The lowest bid was submitted by Army Welfare Trust, which has agreed to offload sugar at Rs 53,600 per ton (incl. taxes).
As the Economic Co-ordination Committee has already allowed price matching, therefore the TCP is likely to offer other bidders matching of lowest prices to complete the procurement of the targeted quantity of 50,000 tons. If the deal gets matured at Rs 53,600 per tons for 50,000 tons of sugar, it means an amount of Rs 214 million will be directly deposited to the exchequer through a single tranche on account of FED on the procured sugar.
Sources said the new system will reduce public dealing as previously after the lifting of sugar mills” representatives were required to visit TCP offices for payment of FED. Cumulatively, the TCP pays some 11.5 percent taxes including 8 percent FED and 3.5 per income tax on sugar.