Displaying items by tag: Tax
India: The Cement Manufacturers Association (CMA) is seeking a tax on cement imports to provide a level playing field to the industry.
In a memorandum to various Union Ministries on 10 April 2015, the CMA said that cement was allowed to be imported into India at zero import duty, whereas all the major raw materials required to make cement such as limestone, gypsum, pet coke and packing bags attract import duties.
"To provide a level playing field, the basic customs duty should be levied on imports of cement into India and import duties on goods required for the manufacture of cement be abolished and freely allowed without levy of duty," said the CMA. The CMA also said that there is a case for rationalisation of domestic taxes on the cement sector in order to make it competitive.
"The value-added tax (VAT) on steel is only 4% whereas it is 12.5 – 15% on cement and clinker in different states. Thus there is a need to slash the tax burden by 20 – 25% through rationalisation and lowering of the excise duty to 6 – 8% without the addition of any specific duty," said the CMA. It also demanded that cement be stipulated as 'declared goods' to put it on equal footing with goods like coal and steel and an element of royalty be included in the calculation of drawback rates.
India: Delhi Government's Revenue Department has fined Holcim India US$11m for evasion of stamp duty. It also directed the company to pay stamp duty of US$36m and a penalty of US$11m within 30 days for violation of stamp duty. Collector of Stamps (HQ) Lalit Mohan told local media that Holcim India had violated the payment of stamp duty with the merger of Ambuja Cement.
"The stamp duty on the merger order is payable at the rate of 3% on the total amount of US$1.2bn which comes out to be US$36m... The company is required to adjudicate or pay stamp duty within a period of one month which it failed to do," said Lalit Mohan in the order.
In its submission to the Revenue Department, Holcim India stated that there was no transfer of movable and immovable assets from transferor company (Ambuja Cement) with transferee company (Holcim) except shares held by transferor company in other companies have been transferred to transferee company. Subsequently the company did not see itself as liable for stamp duty.
Brazil: The Foreign Trade Chamber (Camex) of the Brazilian Ministry of Development, Industry and Foreign Trade has approved anti-dumping measures against six countries: China, Saudi Arabia, Egypt, UAE, Mexico and the US. The Camex has also added a 4% levy to cement imports.
Dumping is the commercial practice whereby a country exports products at lower prices than those charged domestically in order to cause problems to its competitors. Whenever the practice is confirmed via a probe, imports of the products at hand from the dumping country can be overtaxed. The right to apply anti-dumping duties may be granted permanently or temporarily. Provisional authorisations occur whenever probes uncover signs of dumping. They are valid for up to six months and may be converted into permanent authorisations. The latter occur following more thorough probes and are generally valid for up to five years.
The Camex approved the inclusion of six products on the Exception List to the Mercosur Common External Tariff (Letec). When a product is added, its import tax rate can be raised or lowered in relation to the rate applied by the Latin American block's countries. The rate for cement, which was formerly exempt, will now have a 4% rate levied.
Bad news for both cement workers and local clinker production in Australia and New Zealand this week with the announcement of job cuts and planned closures of clinker plants. Holcim New Zealand has confirmed that around 120 jobs will go when its Westport cement plant closes in 2016 along with the rationalisation of a few management jobs when the company integrates its Australian and New Zealand businesses. Meanwhile, Boral announced that it will cut 28 jobs from its Maldon Cement plant in Australia when it ceases clinker production at the end of 2014.
With these planned closures cement production capacity in the antipodes will shrink by just over 1.5Mt/yr to around 7.5Mt/yr, a reduction of over 15% Alongside the drop in native cement production players are re-focusing on an import market.
The trend is highlighted by the fact that Boral's Maldon site will retain its grinding mill. Earlier in June 2014 it was reported that Vue Australia is planning to convert a brownfield site on Kooragang Island, New South Wales into a cement storage and transfer plant. In February 2014 Cockburn Cement cut 44 jobs at its Munster cement plant as it started to restructure its operation for grinding using imported clinker. Also in February 2014 Cement Australia, the joint-owned company between Holcim and HeidelbergCement, had a US$17m expansion of its cement loading and storage facility for processing at Osborne approved by local authorities.
Following its restructuring in 2013, which has seen clinker production cease at Waurn Ponds and soon to cease at Maldon, Boral reported that its cement revenues grew in its 2012 – 2013 financial year. This is likely to continue when the 2013 – 2014 year is reported in August 2014. Likewise, Adelaide Brighton reported growing revenues in 2013. Cement Australia reported growing cement sales year-on-year in the first quarter of 2014 following reduced sales in 2013.
All in all the local cement industry in Australia and New Zealand has taken quite a knock in recent years. Reasons for this have included a poor recovery for the local building materials market, high-energy costs, the Carbon Tax in Australia, competition concerns and the spectre of cheap clinker imports from East Asia undercutting everything. However the return to revenue and then profit suggest that the worst of the job cuts and clinker production shrinkage is over.
In this business environment, revelations such as a China Resources spending upwards of US$300,000 on golf are unlikely to garner sympathy for any measures that appear to reduce international competiveness for Australian industry. The current Australian government led by Tony Abbott is set to make good on its promise to repeal the Carbon Tax from July 2014. The environmental effects will be unclear given that the tax may have cut emissions from participating companies by 7%, falling from 342Mt in 2011 – 2012 to 321Mt in 2012 – 2013, according to the Investor Group on Climate Change. As is usual with localised carbon taxation or legislation, whether global emissions fell during this period or whether emissions grew in looser jurisdictions to compensate is hard to calculate. The trend towards clinker imports suggests that there may be a significant contribution from the latter.
Pakistan: The Federal Excise Duty (FED) on cement is likely to be rise by US$1/t in the upcoming budget for the 2014 - 2015 Pakistan financial year. Federal Board of Revenue (FBR) officials said that the government had reduced the FED on cement from US$7.6/t to US$5/t in the 2011 – 2012 financial year and from US$5/t to US$4/t in the 2012 – 2013 financial year.
According to local press the government promised local cement producers that the FED would be gradually reduced and phased out. However, FBR sources spoken to by the Nation reported that the FED was likely to be increased by US$1/t to US$5/t to make up for a shortfall in tax revenue. However no final decision has been made so far.
If the FED does increase during the next budget then the cost of cement is likely to rise for consumers.
Pakistan: The All Pakistan Cement Manufacturers Association (APCMA) has asked the Federal Board of Revenue (FBR) to exclude cement from the 'Third schedule' of the Sales Tax act or to fix the maximum retail price (MRP) on the basis of two different zones in the upcoming budget of 2014 - 2015.
In a letter to the FMR chairman the APCMA said, that as the dynamics of every province and region are different, collection of sales tax on the basis of a single MRP across the country would force producers to restrict sales to nearby markets. It added that this would restrict sales to further-away markets reducing the potential revenues the FBR could collect.
The APCMA has proposed a zone-based MRP to protect both local consumers from paying excess prices and producers from paying more to sell cement in outlying markets. It also asked the FBR to introduce a uniform tax rate for the corporate sector.
Cement in Pakistan is subject to various taxes including: Corporate Income Tax - 34% of taxable income; Minimum tax – 1% of turnover; Federal excise duty (FED) – US$3.8/t; and Sales Tax 17% of the MRP. The APCMA has also proposed removing the FED and reducing the duty on alternative fuels to zero. Further suggestions included restoring the initial allowance on plants and machinery to 50% (from 25% at present) to encourage production capacity development and reducing import taxes on raw materials and capital goods for industrial development from 5 to 1%.
Spain: Cemex has said that it 'complies scrupulously with all legal and tax obligations in Spain,' in response to reports in the Spanish media about its tax affairs in the country. The company 'does not have any debts outstanding or face any penalties from the Spanish tax service as of this time,' said Cemex. The Mexico-based cement producer has reserved the right to take legal action against anyone publishing inaccurate reports about the company.
Cemex issued the statement following reports in the Spanish media about the firing of a tax inspector for rejecting its appeal of a large penalty. The dismissal led to the resignation of the head of the department overseeing large taxpayers. Subsequently, Deputy Prime Minister Soraya Saenz de Santamaria denied that Finance Minister Cristobal Montoro had any relationship with Cemex's tax advisers before taking up his Cabinet post.
India: Indian Railways has raised a freight tariff of 15% on all commodities, including cement, from 1 October 2013. Designated a busy season charge in a railway notification, the tariff is due to run until June 2014. The charge precedes a review of the fuel adjustment component (FAC), applicable after every six months to adjust fuel prices, that was also due on 1 October 2013.
Turkmenistan: Cement imports to Turkmenistan will have to pay a 100% customs duty starting on 1 August 2013, according to the Turkmenistan.ru news portal. The resolution was signed by President Gurbanguly Berdymuhamedov in order to support domestic production and to streamline the import of cement. A minimum customs import duty of US$200/t will be imposed.
The Mineral Products Association (MPA), which looks after the interests of the cement industry (and other allied industries) in the UK, has said that it welcomes a temporary tax-freeze relating to climate change announced in the UK Budget of 20 March 2013. The MPA singled out the decision to freeze the indexation of the Aggregates Levy until April 2014 and the decision to introduce the Climate Change Levy mineralogical and metallurgical exemption for energy-intensive industries such as cement and lime. Both of these moves by UK Chancellor George Osborne have been welcomed because they bring some relief to the UK cement industry and wider construction activities. MPA members make money from such activites and any potential cost that can be eliminated or delayed, even for a short time, is welcome amid the current slump that is the UK economy. This is especially true as the UK weathers the one of the longest and most severe winters for 50 years. So far, so much sense.
However, how does this reaction to the Climate Change Levy exemption tie in with the MPA's February 2013 announcement that it thinks that the UK cement industry's total CO2 emissions should be reduced by 81% by 2050? What should UK cement producers make of this? The MPA's cement industry CO2 reduction targets are certainly bold. On the face of it, they look achievable given the progress that has been made to date by the UK cement industry, although much is left to the imagination as to which areas could and should contribute most to the reduction target. The 81% reduction target includes the successful future commercial development of carbon capture and storage (CCS) technologies. It also relies on an increased proportion of renewable sources for the electricity that the cement industry will receive in 2050, something else that is totally out of the industry's control.
However, much hard work has already been done by cement companies in the UK. As in other EU countries and developed nations, total dust and toxic emissions have fallen dramatically in the UK cement industry since 1990. The country's alternative fuel substitution rate has now hit ~40%. Yet, as the MPA highlights in its document detailing the targets for 2050, much of the low-hanging fruit has already been taken. Further reduction in overall CO2 emissions will be significantly affected by both regulations and cement company progress. Cement companies can increase their consumption of 'wastes' and fit waste-heat recovery systems. Through such measures they can achieve further reductions in emissions. Some kilns have hit alternative fuel substitution rates of 100% for limited periods and examples from the near continent show that 80% alternative fuels can be the norm. However, unlike these 'bottom-up' approaches, which can be introduced at a plant in a period of months, regulations take years to evolve and come into force, often involving slow and lengthly debate by politicians, associations and consumers.
To discourage the government from seeking to impose stricter environmental regulations for the cement industry by welcoming the exemption, is the MPA undercutting its own calls to reduce CO2 emissions in the UK cement industry? From a cement producer's perspective, it looks like the MPA could hold two contradictory opinions on the same subject: that you can welcome reductions in climate regulation while also calling for stricter emissions regulations. This phenomenon was famously termed 'double think' by George Orwell in his classic novel '1984,' but the MPA's situation is far more subtle. Often the regulators and those being regulated can agree on the same target but not on how that target should be reached. The next 37 years will show whether or not this target is even possible.