Imposition of WHT Denounced FPCCI Supports Fixed Tax on Flour Mills Saquib Fayyaz Magoon, Acting President FPCCI

Karachi: Mr. S. M. Tanveer, patron-in-chief of UBG, has apprised that, in order to broaden the tax base and bring the flour mills under the tax net, the government should revert the illogical, impractical and regressive withholding tax imposed in the federal budget 2024 – 25. Wheat is the most consumed food commodity the indispensable staple food of the country of 249 million people; and, FPCCI denounces any step to disrupt the supply chain of this essential item, he added.

It is pertinent to note that a high-profile delegation of Pakistan Flour Mills Association (Sindh) conduced a joint meeting with FPCCI to propose changes to the government on taxes imposed on flour mills.

Mr. S. M. Tanveer explained that the WHT has been imposed at a rate of 2.5 percent on non-filer retailers and 5.5 percent on the flour mills – whereas they operate on a meagre profit margin of 0.5 – 1.0 percent. Therefore, this taxation measure is not only counterintuitive for defying any economic sense; but, will also be counterproductive in revenue generation. At FPCCI, the apex body, the reading of the pulse is that it will decrease the tax collection from the sector, he added.

Mr. Saquib Fayyaz Magoon, Acting President FPCCI, stressed that only a fixed tax in the range of 0.5 – 1.0 percent can work and add into national tax collection end of the day; and, the prudence behind the proposal is that flour mills will be willing to pay as it will not affect their supply chain; will not hold up their working capital and will be easier to comply. These mills have been exempt previously for advanced taxation under section 153, he added.

Mr. Saquib Fayyaz Magoon, Acting President FPCCI, reiterated FPCCI’s stance that the taxes which are regressive in nature and difficult to comply may give a boost to the practice of flying invoices; as small traders like flour millers may opt for them as the last resort to continue to sell to the retailers – if the government does not listen to their legitimate concerns. It is unfair to expect flour mills to be the collection agents of WHT on behalf of FBR as it is not their role, neither their capacity, he added.

Mian Zahid Hussain, Chairman of FPCCI’s Policy Advisory Board, highlighted that wheat flour lies in the fast moving consumer goods (FMCG) category; where liquidity is of paramount criticality for the flour millers. There is no way they can pay 5.5 percent plus 2.5 percent in WHT and remain operational; which will result in closure of thousands of flour mills across the nation, he added.

Chaudhry Amir Abdullah, Chairman of Flour Mills Association (Sindh), maintained that flour mills are already paying turnover tax of 0.25 percent based on electricity units consumed. This tax is calculated on the basis of total grinding done in month as manifested in the electricity bills of the flour millers. It implies that the flour mills are already paying their fair share of taxation as assessed based on their low profit margins of less than 1 percent. He added that there is no such example of WHT in the region as has been imposed in Pakistan and most flour mills in the SME sector have incurred losses in last quarter due to the price volatility

Brig Iftikhar Opel, SI (M), Retd.
Secretary General