Import exempt from advance income tax

The National Board of Revenue (NBR) has declared that imports of raw materials used to make active pharmaceutical ingredients (API) will be exempt from advance income tax until June 2024.

"We have exempted the tax to encourage the domestic production of APIs," said an NBR official.

The tax authority offered the discounts through a notification issued earlier this week.

The recent tax benefit comes a month after the NBR relaxed the rules regarding VAT exemption on manufacturers' imports of pharmaceutical raw materials.

Last June, the NBR exempted VAT on the import of API raw materials on certain conditions. One of which was to manufacture at least five new molecules in a calendar year, which would add 60 per cent value to the domestic industry.

A molecule is an organic compound used to regulate a biological process.

The two conditions have since been eased, requiring that only two new molecules are produced each year, adding 20 per cent value, according to another NBR notification.

Four or five firms are currently engaged in API production and the recent tax exemption might lead to a reduction in the cost of raw materials. This would enable the pharmaceutical sector to further develop, the NBR said.