The National Board of Revenue (NBR) has removed the Advance Tax (AT) on the import of parts and accessories for locally manufactured computers, as stated in a recent notification.
This move comes two and a half years after the NBR initially granted an exemption from Value Added Tax (VAT) on the import of computer accessories in July 2021, aiming to promote domestic manufacturing.
Currently, a 3 percent AT applies to raw materials and accessories for locally produced items. With the removal of AT on the import of computer parts, domestic manufacturers will no longer be required to pay this tax, and the refundable amount can be adjusted against the payable VAT.
According to a senior NBR official, there is no VAT for locally manufactured computers, making it impossible to readjust the AT. As a result, manufacturers have to wait for the refund of their capital, which remains blocked for months.
The official mentioned that the NBR has been eliminating AT in areas where there is no VAT at the local stage. In the initial part of the current fiscal year, the NBR removed such AT in specific areas where VAT is exempted during the production stage, responding to demands from stakeholders.
The AT was introduced by the NBR in July 2019 under the VAT law of 2012, to ensure firms maintain transaction records. The tax paid at the import stage is refundable after adjustment against the payable VAT.
