Alvi signs bill about promotion, protection of foreign investment

ISLAMABAD: President Dr Arif Alvi on Tuesday signed the Foreign Investment (Promotion and Protection) Bill, 2022 to provide investment/tax incentives and exemptions of duties and taxes to certain qualified foreign investments, including Reko Diq project, with the secrecy of banking transactions of investors by all banks and financial institutions.

The president gave approval to the bill under Article 70(1) and Article 75 of the Constitution, the President’s Office said.

The bill will provide for the promotion and protection of certain qualified foreign investments and for matters incidental thereto it is expedient and in the national interest to attract, encourage, and protect large-scale foreign investments into Pakistan and to ensure sustainable economic activity and growth and it is necessary to improve the investment climate in Pakistan by way of providing incentives in direct and indirect taxes and ease of transfer and repatriation of foreign investments to the large scale foreign investments and by protecting such incentives from withdrawal and providing expedient and efficacious mechanism to address grievances of investors of qualified investments.

Also, it is essential for the federal government, the provincial governments, the local governments and other relevant authorities to work together and cooperate to ensure the provision of incentives and protection to qualified investments.

Under the bill, the qualified investment entitled to exemption from all kinds of taxes would cover the Reko Diq project in Balochistan, which includes all work done by the Reko Diq Mining Company (Private) Limited (formerly Tethyan Copper Company Pakistan (Private) Limited) ("RDMC") and its associated companies.

The federal government may notify additional investments, sectors, industries or projects as qualified investments through a notification in the official Gazette. The federal government may choose and approve qualified investments on such terms and conditions and for such duration as deemed in the national interest. Provided that no investment shall be notified as a qualified investment unless the amount to be invested (whether in the form of equity or debt) is not less than US 500 million dollars (or its equivalent in Pak rupees).

The secrecy of banking transactions of an investor of the qualified investment shall be strictly observed by all banks and financial institutions, by whoever owned, controlled or managed, except as otherwise provided in accordance with applicable anti-money laundering laws for the time being in force.

The qualified foreign investments would be entitled to exemption from or concession on some or all taxes under the Income Tax Ordinance, 2001 including tax on profits and gains, income tax, turnover tax and withholding tax on interest, capital gains tax, income tax on dividend income and withholding tax on dividend, exemption from or concession on sales tax under the Sales Tax Act, l990 and sales tax on services under respective provincial laws; exemption from the capital value tax, exemption from or concession on Customs duty under the Customs Act, 1969 on the import into Pakistan of all capital goods, exemption from or concession on any export duty or similar duty, cess or levy on the export from Pakistan of any products produced in Pakistan or raw materials, equipment, machinery, components, catalysts, spare parts, hardware, software, devices, instruments, accessories and exemption from or concession on federal excise duty.

Copyright Business Recorder, 2022