The National Board of Revenue has exempted payment of advance income tax on import of more than 400 chemical compounds by the local producers of active pharmaceutical ingredients (API) for four and a half years.
Income tax wing of the revenue board on Wednesday issued a statutory regulatory order dated February 9 giving waiver to the API producers from payment of 5 per cent AIT to facilitate production of the basic raw materials of pharmaceuticals industry.
The benefit will remain effective up to June 30, 2024, according to the SRO signed by NBR chairman Abu Hena Md Rahmatul Muneem.
The exemption will be applicable to import of the technical grade and chemically pure chemical compounds meeting national and international standards which have been enjoying exemption from payment of customs duty at the import stage since May 2018, it said.
Officials said that API makers would have to comply with a number of conditions, including maintaining books of record and submission of income tax returns regularly, for availing the new benefit.
Importers will also have to fulfill some other conditions, including submission of proof that they were complying with the conditions of customs authorities for availing customs duty exemption, they said.
The waiver has been given in line with the National Active Pharmaceutical Ingredients (API) and Laboratory Reagents Production and Export Policy 2018 to boost the local production of raw materials for medicine as well as export.
According to the conditions of the customs wing of NBR, importers will have to use the imported chemical compounds to produce API products at their factories or selling to other pharmaceuticals companies.
The importers must have to be registered with the VAT wing of NBR as manufacturers and must obtain approval from the Directorate General of Drug Administration as API manufacturers.
Importers are not allowed to sell, transfer or use the imported chemical compounds for other purposes.
Earlier, the VAT wing also exempted the API producers from paying VAT on import of raw materials.
The government in May, 2018 framed the policy with a target of reducing the raw material import dependency to 80 per cent by 2032 from 97 per cent in 2016 by the sector.
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