Pakistan solar tax slammed as imports left stranded

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A former Pakistani technology minister has attacked a new tax that has left containers full of imported solar equipment reportedly stranded at ports in the Asian country.

Pakistan's new Financial Act 2014 came into force 1 July, implementing a 30% tax policy for solar panel imports, which were previously exempt from the duties because of their importance in combatting Pakistan’s energy crisis.

The imposition of the tax has led to an estimated 70 containers of solar panels becoming stranded at the port of Karachi.

According to local reports, the tax for the imported containers has gone from zero, to as much as PKR5.5 million (US$55,000) in owed tax per container. The tax could add up to a 35% increase on panel prices.  

Atta-ur-Rahman, Pakistan’s former technology minister and a leading scientist told PV Tech: “This is a wrong policy decision by the government. They should have made it tax free and offered a 30% subsidy on import of solar panels.”

“The world over, solar and other alternative forms of energy have been promoted through incentives, not through additional taxes,” said Rahman.

Before the Financial Act came into force, for a tax exemption, solar importers had to write a letter to the national Alternative Energy Development Board (AEDB) for approval.

Local reports from Custom Today in March suggested that complaints had been made by customs officials over the alleged misuse of the tax exemption by importers. According to The News Pakistan’s Engineering Development Board (EDB) proposed an end to the tax exemption, but quoted a source from AEDB claiming the latter was not informed of any changes. 

The source said the AEDB was pressing for the tax to be overturned.

Previously, the government had pushed solar projects to meet urgent energy demands, with an estimated shortage of 6GW. The government scrapping import duties for solar panels, inviting energy and infrastructure investment from China, introducing a feed-in tariff and building up a 700MW-plus pipeline of PV projects, were supposed to be underline a pledge made by Nawaz Sharif, the pro-solar prime minister elected last year, to end the energy crisis by the end of his five-year term.

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