Government pursues legal means to implement tax relief for Gwadar free zone

ISLAMABAD: The Economic Coordination Committee (ECC) of the cabinet on Wednesday asked the law ministry to find legal means for granting tax relief to the proposed Gwadar free economic zone as the Federal Board of Revenue (FBR) has no more power to announce such incentive through statutory regulatory order.

ECC approved a proposal regarding necessary amendments and exemptions in the Income Tax Ordinance, Sales Tax Act and Custom Act for Gwadar port and free zone. It asked the law division to suggest a way forward for their implementation and bring it up in the next cabinet meeting in consultation with the commerce, planning and maritime divisions, FBR and Board of Investment.

The committee took the decisions on a summary submitted by the ministry of maritime affairs during a meeting, presided over by Adviser to the Prime Minister on Finance and Revenue Hafeez Shaikh.

Sources said the FBR’s power of granting tax exemptions has been withdrawn and provided to the parliament. The government has to introduce amendments into the tax law to make incentives operational for Gwadar free zone, which is an integral part of China-Pakistan Economic Corridor projects. The law division was asked to suggest way forward to resolve this issue as the government wants to provide all kind of tax reliefs to Gwadar free zone, they added.

The ECC further directed the finance division to release one month’s salary amounting to Rs355 million for June to the Pakistan Steel Mills’ (PSM) employees. It also authorised the finance division to arrange for payment of projected net salary of Rs4.097 billion to the PSM employees for the current fiscal year of 2019/20.

Similarly, the ECC further approved payment of Rs128 million for the salaries to the employees of the Pakistan Machine Tool Factory (PMTF) for the February to May period. It directed the ministry of industries and production to hold a meeting with the strategic plan and commerce divisions, Sindh building control and revenue authorities to finalise a plan to hand over the PMTF to the strategic plan division after clearance of all liabilities.

The ECC approved the proposal for reflection in electricity bills of a subsidy by the government of Sindh for 4,514 consumers of Taluka Islamkot in terms of payment of all charges of consumers, using 100 or lesser units of electricity on actual charges as well as a flat subsidy of Rs800 to be given to domestic consumers using more than 100 units.

It was decided that if the provincial government failed to pay subsidy in any future situation for three months, the same amount would be deducted at source by the federal government.

The ECC also approved a proposal for budgetary allocation on annual basis for payment to Asia Petroleum Limited (APL) through Pakistan State Oil under a technical supplementary grant from the current financial year and onwards against accumulating shortfall in guaranteed throughput due to reduced demand in refined furnace oil by Hubco. It asked the ministry of energy to take quick remedial measures for offsetting the accumulating shortfall by engaging local refineries for using APL’s network as reverse pipeline until the contractual obligation ending in 2027.

The meeting was informed that prices of wheat were showing a slight drop in recent days. Wheat stocks in the country were 7.516 million tons as on 16th August as compared to 10.950 million tons till the same date last year. Similarly, around 0.369 million tons of wheat and 0.198 million tons of wheat flour have been exported through sea and land route from July 1, 2018 to August 16, 2019.