The government has granted tax exemption on income of China Overseas Ports Holding Company Limited from Gwadar Port operations for a period of twenty years, with effect from February, 2007. Sources told Business Recorder here on Friday that Finance Bill (2014-15) has proposed amendment in the Income Tax Ordinance 2001 to grant tax exemption to the said company. A clause 126A has been substituted with a new clause extending income tax exemption for the company.
They added that the decision was taken on a proposal of Revenue Division that exemption on income tax granted to Port of Singapore Gwadar (Pte) in 2007 may now be transferred to the China Overseas Port Holding Company subsequent to transfer of Concession Agreement from former to the latter.
The Revenue Division further stated that income tax exemption and other facilities had been approved in a meeting of ECC in 2007 for the Concession Agreement on the request of Ministry of Port and Shipping for Operation of Gwadar Port. Subsequently, in 2007 Concession Agreement was signed between Gwadar Port Authority and Port of Singapore Authority (PSA) Gwadar (Pte) and exemption from income tax was allowed to PSA and its operating companies for a period of twenty years.
Sources added alteration in concession agreement was allowed by the federal government in June 2013 for transfer of Gwadar Port's concession agreement from PSA to China Overseas Port Holding Authority and subsequently the Ministry of Ports & Shipping approached the concerned authorities to substitute the name PSA Gwadar Pte and its operating companies with China Overseas Ports Holding Company Limited on exemption from income tax. The ECC was also told that opinion of Law Division had been solicited as to whether China Overseas Ports Holding Company Limited can be allowed exemption from income tax on the basis of transfer of Concession Agreement in the absence of any specific ECC approval. The Law Division had stated that in this case tax exemption was person specific and was allowed to PSA with the approval of ECC. Since, the concessions were granted with the approval of the ECC, its further assignment to another entity would also be made with the approval of the ECC, added Law Division. In view of the Law Division's opinion, the ECC was requested to give approval for transfer of exemptions on income tax, which was allowed to PSA in 2007, to China Overseas Ports Holding Company Limited. Sources said that the proposal was approved by the ECC.