Finance Minister Muhammad Aurangzeb on Thursday said the government has decided to withdraw tax and duty exemptions for former Federally Administered Tribal Areas (FATA) and Provincially Administered Tribal Areas (PATA).
Addressing a session of the National Assembly, the finance minister said under the 25th Amendment in the 1973 Constitution on June 2018, all federal tax laws were extended to ex-FATA and PATA, which are called newly merged districts.
“However, back then, in order to bring these areas at par with the mainstream economy, exemption was given on sales and income tax under the Finance Act 2019,” he said.
The exemption was extended for one year under the Finance Act 2023, he said.
“These exemptions are set to expire on June 30, 2024, by the operation of law and we are not proposing any new legislation.
“The government will not propose an extension.”
During the session, Aurangzeb said that industrialists representing various sectors including steel, fabric, oil and ghee, tin, etc have been “consistently asking” for the removal of this “preferential tax treatment”.
“They are all looking for a level-playing field for industries across the country,” he said.
Last year, the then government, in the federal budget for the financial year 2023-24, extended the tax exemption of FATA and PATA by one year till June 30, 2024.
Hundreds of ghee, steel mills, plastic factories, power loom mills, and marble factories operating in these regions were given tax exemptions in income tax and machinery export, raw material import.
When FATA and PATA were being merged into Khyber Pakhtunkhwa province, a five-year tax exemption was given till 30 June 2023. From the National Finance Commission, the four provinces and the federal government allocated one percent of the divisible pool for the development of the merged districts.
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