ISLAMABAD: Federal Board of Revenue (FBR) eyes on higher contribution to the increase of revenue collections along with inclusion broadening of tax base in coming years in result of two investment policies.
A large number of tax exemptions related incentives have been announced for the promotion of formal tax culture at domestic level through the facilitation of foreign companies.
“Greenfield Investment and Brownfield Investment policies are being termed as significant in this regard” an official source at FBR told Customs Today.
When asked about the significant incentives associated by the FBR to these policies, the source elaborated that the Greenfield Investment was defined as the installation of new and independent automotive assembly and manufacturing facilities by an investor for the production of vehicles of a make not already being assembled / manufactured in Pakistan.
This policy totally relates to the new investors” the source added saying that Greenfield Investment Incentives duty-free import of plant and machinery for setting up the assembly and manufacturing facility on a one-time basis.
Import of 100 vehicles of the same variant in completely built unit (CBU) form at 50% of the prevailing duty for test marketing after ground breaking of the project has been granted” the source added saying that concessional rate of customs duty of 10% on non- localized parts and 25% on localized parts for a period of five years for the manufacturing of vehicles also included in this regard.
Similarly, the source said that import of all parts (both localized and non-localized) at prevailing customs duty were applicable to non-localized parts for manufacturing of trucks, buses and prime movers for a period of three years.
While replying to a question about Brownfield Investment policy, the source added that it was defined as revival of an existing assembly and manufacturing facilities; that is non-operational or closed for last four years.
Moreover, vehicles of that trade mark are not in production in Pakistan for last four years and that the revival is undertaken either independently by original owners or new investors or under joint venture agreement with foreign principal or by foreign principal independently through purchase of plant.
Under this policy, the source said that FBR had granted incentives like import of non-localized parts at 10% rate of customs duty and localized parts at 25% duty for a period of three years for the manufacturing purpose.
Import of all parts (both localized and non-localized) at prevailing customs duty is applicable to non-localized parts for manufacturing of trucks, buses and prime movers for a period of three years.
Since tax related incentives have been granted therefore, the source said that FBR eyed on massive industrialization in the country; once closed industrial units along with new ones are become operational, revenue collection as well as broadening of tax base are a natural and automatic process.
