Gwadar not be taxed for 40 years on certain conditions: FBR

ISLAMABAD: In a bid to incentivise $46 billion Pak-China Economic Corridor (CPEC), the FBR has proposed exemption of all taxes for the Gwadar Port through the Finance Bill 2016-17.

Under exemption for the Gwadar Port under sections 126A, 126AB, 126AC, 126AD Schedule II, the FBR has proposed that total income of the companies associated with the development of Gwadar Port, as specified in the above clauses, be exempted from charging of income tax for specified periods.

The Finance Bill 2016-17 states that materials and equipments for construction and operation of Gwadar Port and development of Free Zone for Gwadar Port as imported by or supplied to China Overseas Ports Holding Company Limited (COPHCL) and its operating companies namely (i) China Overseas Ports Holding Company Pakistan (Private) Limited (ii) Gwadar International Terminal Limited, (iii) Gwadar Marine Services Limited and (iv) Gwadar Free Zone Company Limited, their contractors and sub-contractors; and Ship Bunker Oils bought and sold to the ships calling on/visiting Gawadar Port, having Concession Agreement with the Gwadar Port Authority, for a period of forty years, subject to the following conditions and procedure, namely,–

(A). Conditions and procedure for imports.– This exemption shall be admissible only to China Overseas Ports Holding Company Limited (COPHCL) and its operating companies, their contractors and subcontractors which hold the Concession Agreement;

(i) Ministry of Ports and Shipping shall certify in the prescribed manner and format as per Annex-I that the imported materials and equipments are bona fide requirement for construction and operation of Gwadar Port and development of Free Zone for Gawadar Port.

The authorised officer of that Ministry shall furnish all relevant information online to Pakistan Customs against a specific user ID and password obtained under Section 155D of the Customs Act, 1969 (IV of 1969). In already computerised Collectorate or Customs station, where the computerised system is not operational, the Project Director or any other person authorised by the Collector in this behalf shall enter the requisite information in the Customs Computerized System on daily basis,

(ii) Whereas entry of the data obtained from the customs stations which have not yet been computerised shall be made on weekly basis, provided that this condition shall not apply to ship bunker oils; and

(iii) The goods so imported shall not be sold or disposed of without prior approval of the FBR and payment of sales tax leviable at the time of import, provided that this condition shall not apply to ship bunker oils.

(B). Conditions and procedure for local supply: –

(i) This exemption shall be admissible only to China Overseas Ports Holding Company Limited (COPHCL) and its operating companies, their contractors and subcontractors which hold Concession Agreement;

(ii) for claiming exemption on goods which are otherwise taxable in Pakistan, the operating companies will purchase the materials and equipments for the construction of Gwadar Port and development of Free Zone for Gwadar Port from the sales tax registered persons only;

(iii) invoice of the exempt supply, containing the particulars required under Section 23 of the aforesaid Act, shall for each supply be issued by the registered person to the operating company mentioning thereon that the said invoice is being issued under this notification;

(iv) A monthly statement summarising all the particulars of the supplies made in the month against invoices issued to the operating companies shall be prepared in triplicate by the registered persons making the exempt supplies and shall be signed by the authorised person of the registered person. All three copies of the said signed monthly statement shall be got verified by the registered person from the person authorised to receive the supplies in the office of operating company, confirming that supplies mentioned in the monthly statement have been duly received;

(v) After verification from the operating company, original copy of the monthly statement will be retained by the registered person, duplicate by the operating company and the triplicate provided by the registered person to the Collector of Sales Tax having jurisdiction, by twentieth day of the month following the month in which exempt supplies to the operating companies were made; and

(vi) The registered person making the exempt supplies shall keep the aforesaid record for presentation to the sales tax department as and when required to do so. Supplies made by the businesses to be established in the Gwadar Free Zone for a period of twenty-three years within the Gwadar Free Zone, subject to the condition that the sales and supplies outside the Gwadar Free Zone and into the territory of Pakistan shall be subjected to sales tax.