In order to reduce the direct cost of manufacturing businesses utilising coal, the Pakistan Government has lowered the tax rates that were levied on imported coal.
Under the Budget presented for the FY 2018-19, the government has reduced the Custom Duty (CD) on imported coal from 5% to 3%.
Moreover, the government has also rationalized the tax collected from the commercial importers/large trading houses. Earlier, a tax of 5.5% from companies and 6% from persons other than companies were levied on coal imports comprised the final tax, which has now been reduced to 4% for filers and 6% for non-filers.
Pakistan’s Demand for imported coal has been boosted by the commissioning of the two new thermal power plants under the CPEC projects (China-Pakistan Economic Corridor). Besides, there has been steady requirement of coal from Pakistani cement firms as the country completes new infrastructure projects.
Under the planned budget, the federal government of Pakistan has unveiled a sum of Rs 1.03 Trillion towards Public Sector Development Programme (PSDP) for the next fiscal year, with 62% proposed to be spent on infrastructure including allocations for projects under the China-Pakistan Economic Corridor (CPEC).
The tax revision on coal imports would certainly help the power plants, thus making thermal power generation more viable. While for the cement sector, the lowered tax rates have been slightly off-set by the increase in Federal Excise Duty (FED) on cement from Rs. 1.25/kg to Rs. 1.50/kg.
As per the Vessel Line-up Data compiled by CoalMint research, Pakistan’s coal imports stood 3,263,084 MT during the first quarter of the CY18 (Jan’18-Mar’18). As a result of the enormous growth in coal imports, the country has attained nearly one-third of the total coal imported in CY17, during the first quarter itself.
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