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Definition of Commerical Importers changed in Sales Tax Rules

ISLAMABAD (April 16 2006): The Central Board of Revenue (CBR) has changed the definition of 'commercial importers' to ensure collection of sales tax on the basis of 10 percent value-addition from importers dealing in import and local supply of 'same state goods'.

The CBR has amended the Sales Tax Special Procedure Rules, 2005 through SRO 346(I)/2006 issued on Saturday. Official sources told Business Recorder that the 'same state goods' are those which are imported, and supplied, without putting through any manufacturing process.

The manufacturers-cum-importers had been misusing the facility by paying 10 percent sales tax on value-addition, instead of actual much higher value-addition. These manufacturers-cum-importers were paying sales tax on 10 percent value-addition under the garb of commercial importers. Similarly, they also availed of exemption from audit as per the provisions of the Sales Tax Special Procedure Rules, 2005.

The provision of 10 percent value-addition was introduced only for genuine commercial importers. On the other hand, the manufacturers-cum-importers, engaged in the manufacturing process, did not fall in the category of 'commercial importers'.

Through the amendment, the CBR has changed the definition of 'commercial importer'. As per new definition, 'commercial importer' means “any registered person who imports goods for the purpose of further supply in the same state to any other person”.

Previously, it said that “commercial importer means an importer who imports goods for the purpose of further supply to other persons and is registered as commercial importer whether exclusively or otherwise”. Now, the manufacturers-cum-importers would pay sales tax on actual value-addition on the local supply of the finished products.

Officials said that the new definition of 'commercial importer' is also in line with the sales tax refund rules.

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