Import of construction equipment, machinery CAP urges exemption of Sales Tax

Constructors Association of Pakistan (CAP) has called for exempting the import of construction equipment, machinery and formworks system including plywood for formwork from advance sales tax at 17 percent and additional sales tax at three percent.

CAP Chairman Engr Kamal Nasir Khan made this demand in the budget proposals for year 2018-19 submitted to the Federal Board of Revenue. He said the construction sector plays a major role in the economic development and uplift of a country. It is an important employment generating Industry and offering job opportunities to millions of skilled and un-skilled labour forces. In fact, it is the second largest sector, after agriculture, in creating employment.

He said construction was declared an Industry by the Government in 1999 but unfortunately not given the status of Industry over the years. Consequently, the SMEs could not develop and major construction projects are being executed by foreign companies at much higher rates.

To enhance the capacity of the Construction Industry of Pakistan, induction of latest and good condition construction machinery and equipment is the foremost requirement.

Submitting budget proposals in his letter, Engr Kamal Nasir said to enable the construction industry to import construction equipment, machinery and formwork systems including plywood for formwork, it should be exempted from the levy of advance sales tax and additional sales tax. This exemption may only be granted for an initial period of three years to enable the capacity enhancement of local construction industry, he proposed.

To avoid misuse of this facility, he added that the exemption may only be allowed to constructors who hold a valid Contractors License from Pakistan Engineering Council (PEC).