An acute crisis is observed in the manufacturing of tractors and their parts that play an important role in the economy of the country. The export value of this sector is $20 million, the number of supported vendors is 200, current employment – is 200 thousand people, while the level of the sector’s localization is at 95%.
The troubles started with the proposal of imposing a 10% sales tax on tractors from the start of June of 2024. Earlier, tractors used to enjoy tax-free status, which helped organizations like Millat Tractors Limited (MTL) to work efficiently. This new tax policy has put MTL back to the refund regime a situation that the company experienced after the passing of SRO 363 which set a refunding mechanism that was to be effective within a span of three months.
More twists were introduced early in 2022 when SRO 563 (1)/2022 placed conditions for tractor buyers, for refunds only to be made to farmers with authentic land documents. This left out many people as they could not meet the set standards/demands. However, the industry has failed to realize the refunds the same as the required conditions have been met due to which the industry has been affected financially severely.
Recently, Millat Tractors has entertained a delegation from the Pakistan Association of Automotive Part & Accessories Manufactures (PAAPAM) led by its Chairman Abdul Rehman Aizaz and Sr. Vice Mshad Ali where these crucial focal issues were explained. They termed it as very important and said that two months have passed after the budget announcement and FBR has even not come up with a method for the process of sale tax refund despite of letters and appeals. Thus, specific MTL operations have been temporarily shutdown from July 1st, without orders or invoices, and the company lost much more than last year when it was selling 30,000 units.