ISLAMABAD: The Federal Board of Revenue (FBR) is working on new tax incentives for Chinese companies including exemption from turnover tax for industrial relocation from China to Pakistan.
Sources told Business Recorder that the turnover tax exemption is on top of the agenda to be discussed during the visit of Prime Minister Shehbaz Sharif to China.
The FBR is chalking out improved incentives for the industrial relocation from China to Pakistan. In this connection, the Board of Investment (BOI) and the FBR will finalise the working paper keeping in view the demands of local and international companies. The proposed incentives would be presented before the government during the next meeting on the prime minister’s visit to China to be held on coming Monday.
In the budget (2022-23), the rate of minimum tax on turnover of oil marketing companies has been brought down from 0.75 per cent to 0.5 per cent under the Finance Act, 2022.
The minimum tax on turnover under Section 113 is payable by a resident company, permanent establishment of a non-resident company, an individual, or an AOP having a turnover of Rs100 million and above under certain specific situations mentioned therein.
Previously, a person who had paid minimum tax on turnover under section 113 was allowed to carry forward the said tax for five succeeding tax years. Now, this carry forward has been restricted to three years. The rate of minimum tax on turnover of oil marketing companies had been brought down from 0.75 per cent to 0.5 per cent.
Pakistan and China are also expected to discuss the establishment of border trade and transit facilities between Xinjiang and Gilgit-Baltistan at Khunjerab pass. In this regard, the government will identify bottlenecks for trade through the Khunjerab from Pakistan’s side and request the Chinese side to facilitate exports through this route.
The Ministry of Science and Technology should make arrangements for compliance/certification of products to be exported through the Sust border. The Pakistani side would also check the Chinese quarantine requirements for exports through the land route and make recommendations on how the exports could be facilitated.
According to the sources, Advisor to the Prime Minister on Establishment emphasized that the issues on Pakistan’s side should be resolved prior to the visit of the prime minister to China. Syed Tariq Fatemi, Special Assistant to the Prime Minister on Foreign Affairs, underscored that importance of the visit and advised the concerned ministries to prepare well for the visit. He proposed that an advance party of concerned officials should go to Beijing, ahead of the PM’s visit, to it up the deliverables.
Special Assistant to the Prime Minister on Government Effectiveness observed that ministries should prioritize their recommendations for the visit.
The agenda for the PM should be concrete, focused and ready to be delivered. Zafar Mahmood, SAPM, stated that position papers may be developed on each item. These must be provided to the Chinese Embassy in Islamabad and Pakistan’s Embassy in Beijing, well in time, so that the Chinese side can process them and advise their leadership. He also suggested that, at least, one special economic zone (SEZ) must be functional which does not require layers of regulatory approvals to proceed ahead with industrial cooperation. It was decided that the next meeting will be held on Monday (Oct 3).
Copyright Business Recorder, 2022