ISLAMABAD: The Federal Board of Revenue (FBR) has well guarded the interests of domestic manufacturing sector while granting income tax, sales tax and Federal Excise Duty exemptions on import of plant, machinery and equipment under China Pakistan Economic Corridor (CPEC). This limitation has been made in a bid to safeguard interests of local manufacturing sector
A well placed source at FBR told Customs Today that no exemption from income tax, sales tax and federal excise duty (FED) under the CPEC program had been provided to the Chinese exports. However, exemption from income tax, sales tax and federal excise duty (FED) has been provided for a number of specific CPEC related projects.
Exemption from sales tax and federal excise duty to materials and equipment for construction and operation of Gwadar Port and Gwadar Free Zone has been provided. This exemption is equally available to imported as well as locally manufactured materials and equipment” the source said adding that in case of imports, the exemption was not specific to materials and equipment imported from China.
To question about possible impact on domestic manufacturing sector due to these exemptions, the source said that impact of exemption on country’s manufacturing sector couldn’t be quantified before completion of the projects.
The source further maintained that exemption from income tax and sales tax had been provided in respect of plant, machinery and equipment including dumpers and special purpose motor vehicles imported for construction of Sukkur-Multan Section and Thakot-Havellian section, parts of CPEC.
However, the source emphasized that to safeguard the interest of country’s manufacturing sector, the exemption from sales tax had been provided to plant, machinery and equipment, etc. which were not locally manufactured. Moreover, this exemption is not specific to imports from China.
The source observed that exemption from sales tax to equipment and material imported for Lahore Orange Line Metro Project had been provided. Exemption from the applicability of the provisions of section 148 of the Income Tax Ordinance, 2001 regarding advance income tax at import stage has been provided in respect of Rail Based Mass Transit Project in all the four provincial metropolis.
