The Pakistan Association of Large Steel Producers (PALSP) has appealed to Prime Minister Shehbaz Sharif to take urgent steps to stabilize and boost the local steel industry’s exports. The industry is currently facing a dire situation with razor-thin profit margins and closure looming. PALSP has urged the government to rationalize the turnover tax rate and extend the turnover tax adjustment period to five years.
PALSP has highlighted the acute shortage of raw materials due to curbs on letters of credit, high-interest rates, and rupee devaluation as factors that have contributed to the industry’s current state. These issues are beyond the control of the steel industry, and the struggling businesses are expected to incur significant losses.
The steel industry is also calling on the government to abolish the minimum tax or reduce its rate from 1.25 percent to 0.25 percent for steel manufacturers. The carry-forward period of minimum tax should also be extended to five years to allow for proper adjustment.
Currently, most units are operating on minimum capacity, and some have already shut down their operations.PALSP has emphasized the need to rationalize the turnover tax rate to 0.25 percent, which is currently high and regressive, hurting the documented tax-paying sectors. The steel sector is unable to evade taxes as production can be cross-checked through electricity units. The turnover tax was initially introduced to bring SMEs into the tax net, but it has now become a burden for the documented tax-paying sectors.
The steel industry has been diversifying into non-ferrous metals such as copper and aluminum, and the iron and steel sector has emerged as the sixth-largest and fastest-growing exporting industry. However, the current situation could erode the exporting ability of the sector. PALSP has urged the government to support the industry in these difficult times instead of forcing the closure of operations.
PALSP’s urgent appeal to the Prime Minister highlights the dire situation faced by the local steel industry. The industry is on the brink of closure, and urgent action is needed to stabilize and boost exports. Rationalizing the turnover tax rate and extending the turnover tax adjustment period to five years are crucial steps to support the steel industry. The timely support of the government can help the industry survive this difficult time instead of closing operations
