Photonews Logo Photonews logo
  • Home
  • Pakistan
    • Punjab
    • Sindh
    • Khyber Pakhtunkhwa
    • Azad Jammu Kashmir
    • Balochistan
    • Gilgit – Baltistan
  • World
  • Business
  • Entertainment
  • Videos
    Quick Tour of Dubai: Exploring the City within 2 Minutes
    Videos

    Quick Tour of Dubai: Exploring the City within 2 Minutes

    April 1, 2023 2 Min Read
    101 Talaqain
    Videos

    101 Talaqain: Zahid Ahmed stars in a new drama-comedy series

    March 29, 2023 1 Min Read
    Nicolas Cage 'Renfield' as Dracula
    OffbeatVideos

    Nicolas Cage drinks his own blood while filming ‘Renfield’ as Dracula

    March 28, 2023 2 Min Read
  • Sports
  • Offbeat
  • Blog
  • Contact
Reading: Govt plans to impose 10% tax on milk
PhotoNews PakistanPhotoNews Pakistan
Aa
Search
  • Home
  • Pakistan
    • Punjab
    • Sindh
    • Khyber Pakhtunkhwa
    • Balochistan
    • Azad Jammu Kashmir
    • Gilgit – Baltistan
  • World
  • Business
  • Entertainment
  • Videos
  • Sports
  • Offbeat
  • Blog
  • Contact
Have an existing account? Sign In
Follow US
© 2022 Photonews. All Rights Reserved.
milk
PhotoNews Pakistan > Business > Govt plans to impose 10% tax on milk
Business

Govt plans to impose 10% tax on milk

Last updated: 2016/05/17 at 4:00 PM
5 Min Read
Share
SHARE

The government is set to drop a second “white bomb” on the nations’ children within a year, as it is planning to impose 10% sales tax on branded milk in addition to increasing the tax on other dairy products by up to 17%.

The budget proposals, if carried  through, would force consumers to pay an extra Rs250 billion to milk producers, both of packaged milk and loose milk sold by milkmen. It could also threaten over $500 million planned foreign investment by FrieslandCampina – one of the leading global companies – in Engro Foods Limited.

The company is planning to acquire a majority stake in Engro Foods, say industry sources. The Federal Board of Revenue (FBR) has been pushing these proposals to generate over Rs11 billion in additional revenues in the next financial year 2016-17, beginning July, said the sources.

It has proposed that milk and fat-filled milk sold in retail packaging, under a brand name, should be taxed at the rate of 10% against the current zero tax. The tax authorities have estimated receiving Rs10 billion from this single move. The FBR has proposed that milk should be taken out of the zero-rating regime.

According to the second proposal, the tax authorities have sought an increase in sales tax on flavoured milk, yogurt, cheese, butter, cream, desi ghee, whey and cream from 10% to the standard 17%. The estimated size of the additional revenue is Rs1 billion, according to the FBR working.

This would be the second change in the tax structure of the dairy industry in the last one year. In the last budget, the federal government had imposed 10% sales tax on yogurt, cheese, butter, cream, desi ghee, whey and cream. Finance Minister Ishaq Dar had claimed that the rich class consumed these items.

However, the abrupt and frequent changes in the tax structure are now threatening the already vanishing foreign investment in the country.

According to industry sources, Engro – one of the largest conglomerates – is in discussion with FrieslandCampina for a potential strategic partnership. The Dutch company wants to acquire a 51% stake in Engro Foods and the transaction is estimated at around $500 million.

Pakistan is the fourth largest milk producer in the world, with production estimated at more than 40 billion litres per year. Despite the abundance of this valuable resource, only 6% of the tradable milk is processed to be consumed in a hygienic format.

The government has classified dairy items in Fifth Schedule of the Sales Tax Act, whereby these items are charged zero sales tax. This has enabled producers to keep the difference between loose and packaged milk price to low levels, making nutritious and unadulterated milk affordable to consumers.

According to Engro Foods, any change in tax structure of the dairy industry would result in the discontinuation of tax refunds and will inflate milk price by Rs8 per litre.

Furthermore, it adds, the price increase will result in consumers being out of pocket by Rs250 billion, as loose milk suppliers would increase price and they operate mostly outside of the tax net.

The dairy category carries a 7% weight in the CPI basket and any price increase will contribute to an increase in inflation. As Ramazan is expected to coincide with summer months, when demand is at its highest, one can expect further inflationary pressure in the holy month.

People close to Engro Foods said while discussions with Friesland were on-going, any adverse taxation would increase the tax or regulatory burden on the packaged milk industry which could put this key investment to risk.

The FBR is proposing changes to the tax structure for concealing its inefficiency, as under the zero-rating regime it has to pay tax refunds to the industry. The FBR owes over Rs20 billion in refunds to dairy producers that it is showing as its revenues, according to the Pakistan Dairy Association.

admin May 17, 2016
Share this Article
Facebook Twitter Pinterest Whatsapp Whatsapp LinkedIn Email Copy Link Print
Leave a comment

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Recent Posts

Uorfi Javed Wardrobe Apology, Uorfi Javed April Fools, Uorfi Javed fashion change

Uorfi Javed’s “Sincere” wardrobe apology: A prank or genuine change?

Twitter verified badges, Blue Checkmark, Elon Musk, Twitter payment model #GoodbyeTwitter

Goodbye Blue Checkmark: Twitterati’s tearful farewell to verified badges

Quick Tour of Dubai: Exploring the City within 2 Minutes

Quick Tour of Dubai: Exploring the City within 2 Minutes

Britney Spears and Sam Asghari dispel wedding ring rumors

Donald Trump criminal charges, Stormy Daniels

The Trump Card: Trump criminal charges while considering 2024 presidential run

Karachi factory stampede during ration distribution

Deadly stampede in Karachi factory; Owner and staff arrested

Post Archives

More Popular from Photonews

Pepper Sprays Review
Blog

Pepper Sprays: A Review

13 Min Read
Karachi's Crime Rate
Blog

Guns: Why we need them more then ever before

5 Min Read
Flirty 30, Feel Like A Princess
Blog

Flirty 30: Feel Like A Princess – It’s High Time!

4 Min Read
SportsTop News

Pakistan Won the Toss and Elected to Bat

Pakistan won the toss and elected to bat first against Bangladesh in T-20 World Cup match…

March 30, 2014
Top News

Ex-ECP additional secretary, Afzal Khan endorses Imran Khan’s claim of rigging

Former Additional Secretary of Election Commission Pakistan (ECP) Mohammad Afzal Khan revealed on Sunday that results…

August 25, 2014
Top News

Bullets carrying American linked to the FBI

An American arrested in Pakistan for trying to board a plane while carrying pistol ammunition is…

May 8, 2014
Top News

Dr. Shaista Lodhi is sorry

The host of (in)famous morning show “Utho Jago Pakistan”, Dr Shaista Lodhi has apologized over the…

May 17, 2014
PhotoNews Pakistan

Always Stay Up to Date

Subscribe to our newsletter to get our newest articles instantly!

Categories

  • World
  • Pakistan
  • Punjab
  • Sindh
  • Khyber Pakhtunkhwa
  • Balochistan
  • Azad Jammu Kashmir

 

  • Top News
  • Business
  • Entertainment
  • Sports
  • Videos
  • Tech
  • Offbeat
  • Blog

© 2023 Phototnews
All Rights Reserved.

Welcome Back!

Sign in to your account

Lost your password?