Fata, Pata units: No extension in tax exemptions beyond 30th

ISLAMABAD: The government will not extend tax exemptions beyond June 30, 2023, available to the industrial units of iron/steel, plastics, ghee, textile, and other sectors located in the erstwhile, Federally Administered Tribal Areas/Provincially Administered Tribal Areas.

Sources told Business Recorder the Finance Bill, 2023, will not issue exemptions to be expired on June 30, 2023. Thus, the withdrawal of the exemption would have a positive impact on the revenue collection of the FBR in 2023-24.

The sales tax exemption would also expire on the supplies of electricity from June 30, 2023, to all residential and commercial consumers in tribal areas except steel and ghee or cooking oil industries.

At the time of the merger of the erstwhile Federally Administered Tribal Areas/Provincially Administered Tribal Areas in Khyber-Pakhtunkhwa in 2018, tax exemptions had been granted to these areas for five years up to June 30, 2023. Currently, several industrial units located in these areas are manufacturing different goods including iron and steel, plastic, ghee, textile, etc.

It allowed the use of non-customs paid vehicles in erstwhile FATA/PATA for a period of five years ending on June 30, 2023. However, these vehicles would not be allowed to cross over to other areas of the country. On the expiry of the five years’ relaxation period (June 30, 2023), the vehicles would be regularised on payment of leviable duty and taxes.

These units import raw materials through the seaport at Karachi without payment of sales tax and income tax. However, these units are required to sell the finished goods only in the newly-merged districts of erstwhile Fata/Pata and not in the tariff areas/other districts of the province or in other provinces.

In a past meeting of the Senate Standing Committee on Finance, Minister of State for Finance Aisha Ghaus Pasha, Thursday, categorically conveyed to the steel and ghee/cooking industries in erstwhile tribal areas to justify their demand of tax exemptions, which would create distortions for taxpaying units in Pakistan.

Copyright Business Recorder, 2023