Tax exemption laws for Gwadar port, free zone approved – Pakistan

ISLAMABAD: The government on Wednesday approved a series of amendments to the laws aimed at providing exemptions from income tax, sales tax and customs duties to the port and the Gwadar free zone until 2039, but could not decide how to give legal coverage to the decision.

A meeting of the Cabinet's Economic Coordination Committee (CEC) chaired by the Advisor to the Prime Minister of Finance and Revenue, Dr. Abdul Hafeez Shaikh, requested the law ministry to propose a legal exit, possibly a presidential ordinance or a bill : when the Federal Revenue Board expressed its inability to issue a legal regulatory order on the matter.

Earlier this year, the Ministry of Maritime Affairs presented a summary seeking changes and amendments to 17 clauses of the 2001 Income Tax Ordinance, the Sales Tax Act, the Federal Special Tax Law and customs, in accordance with the concession agreement between the Gwadar Port Authority (GPA) and the Overseas Port Authority of China.

The meeting also approves the salary of PSM and PMTF employees

A committee constituted by the ECC agreed on the interpretation of the Law and Justice Division regarding the separate and distinct nature of the Special Economic Zone under the SEZ Act 2012 and the Gwadar Free Zone under the Gwadar Port Concession Agreement.

Interested parties agreed to the amendments to the 12 clauses of the Sales Tax Law and the Customs and EDF Law and the Income Tax Ordinance. However, the amendments to five clauses: 126 BC (with respect to contractors in Annex II), section 153/159 (with respect to certificate exemptions) and 126 BC (with respect to the date / time of exemptions ) of the Income Tax Ordinance 200, serial number 100C (VI Schedule) of the Sales Tax Act of 1990 and the permit to establish a duty-free shop in the Gwadar Free Zone, which was incorporated previously in the summary to the ECC, they were removed by the Ministry of Maritime Affairs at the moment.

Dr. Shaikh said at the meeting that the problem that had been persisting for almost four years should be resolved as soon as possible, for which the law ministry should suggest a way forward.

The ECC also approved the payment of salaries to employees of Pakistan Machine Tool Factory (PMTF) and Pakistan Steel Mills (PSM), as well as a proposal from the Energy Division for the payment of electricity charges by the Sindh government as subsidy to 4,514 domestic consumers of Islamkot Taluka.

The ECC ordered the Finance Division to release the one-month salary, which amounted to Rs355 million, for the month of June to PSM employees and also authorized it to organize the payment of the projected net salary of Rs4.097 billion to employees for the 2019-20 financial year, which will be disbursed every month.

Similarly, the ECC approved the payment of Rs128m as salary for the period from February to May 2019 to the employees of PMTF and ordered the Ministry of Industries and Production to meet with the Strategic Plan Division (SPD), the Division of Commerce, the Sindh Building Control Authority and the Sindh Board of Revenue to finalize a plan to deliver the PMTF to SPD after the liquidation of all responsibilities.

The meeting also approved the payment of more than Rs2bn through the budgetary allocation to Asia Petroleum Limited (APL) through the oil of the state of Pakistan under a complementary technical subsidy of the current financial year and thereafter against the accumulated performance deficit Guaranteed due to the lower demand in the Hubco oil refined oven.

The APL was created in 1994 and laid a pipeline from the port to the Hubco plant with sovereign guarantees for certain quantities of kiln oil. These amounts decreased after the government's decision to reduce the consumption of furnace oil, making the pipeline redundant and forcing the company to lose.

It was agreed that around Rs 1.2 billion for the period from 2014 to 2018 had to be liquidated immediately, followed by Rs884m for the current year. We must find a solution for the future.

Nadeem Babar, an adviser to the prime minister on oil, said at the meeting that negotiations were ongoing with Byco Petroleum, which is a neighbor of Hubco, for the use of the latter's pipeline to send surplus products to the port until the contractual obligation It ends in 2027.

Published on Dawn, August 29, 2019



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