ISLAMABAD: Chairman Federal Board of Revenue, Tariq Bajwa, Tuesday, said that machinery import was tax free for mineral sector, coal mining, and energy as well as infrastructure development at Gawadar Port.
While speaking at panel discussion session of the 3rd Pak-US Business Opportunities Conference here, the FBR Chairman said that Pakistan offered lucrative and profitable business activities in the several sectors where new incentives for foreign and local investors had been flouted.
He apprised the audience about the tax administration reforms, saying that through automation of the system the Government was vying to put in place a corruption-free and speedy tax system in which the officials enjoy least discretion.
I/3 SROs which have been hurting Pakistani economy have been abolished and 2/3 will be abolished by the upcoming budget. Special package of tax exemptions is available for those companies which want to set up food and fruit processing units in Balochistan and Gilgit-Baltistan to promote exports of fruits.
Similarly, special offers of tax incentives are also present for those foreign companies which tend to indulge in exploration of oil and gas in Pakistan to make the country self reliant in energy sector. Moreover, new attractive policy for foreign investment has been announced for new entrants in motorcycle industry because car manufacturing sector has failed to cater the requirements of country’s automobile sector.
Tariff slabs had been reduced from 7 to 5 and the applied tariff was effectively at 25% which would be brought down further. Under the FBR’s tax incentive package the companies working in Special Economic Zones for developments and establishing industries enjoyed special privileges.
The FBR allowed corporate income tax holiday for a period of 10 years for the developers of Special Economic Zones (SEZs) in Pakistan and corporate income tax holiday for 5 years for the industrial projects to be established in such zones. The SEZs are being established in the country with private investment and the government is improving its fiscal incentive regime to attract foreign investment in export-oriented industries.
Realising the central importance of foreign direct investment (FDI) to economic development, the present government has taken wide-ranging steps to liberalise its inward investment regime and have succeeded in attracting substantial amount of foreign investment. The government has decided to make fiscal incentives more competitive to determine development standards for the special industrial and economic zones of the country to make Pakistan more attractive for foreign investors.
In order to attract Foreign Direct Investment in manufacturing, construction and housing sectors, corporate tax rate be reduced to 20% if the investment is in a new industrial undertaking or a construction or housing project to be set up by 30th June 2017 and at least 50% of the total project cost in the form of equity through FDI. This will also generate employment, which is one of our major challenges.
Incentive for Joint Ventures between Companies and AOPs: The non-resident companies investing in Pakistan had to create a joint venture with a local company and the contract receipts of such joint ventures were taxed as final tax in the hands of the joint venture/AOP and thus the non-resident companies could not enjoy their status of being a non-resident.
To facilitate such arrangements for the non-residents, if one member of the joint venture is a company, it is to pay tax separately at the applicable rate while the individuals are liable to pay tax as an AOP separately.
To promote agricultural sector concessions have been granted to encourage tunnel farming by removing customs duty on import of plastic coverings and mulch film, anti-insect net and shade net. Sales tax on high irrigation equipment and equipment for green house farming is also proposed to be exempted.
