The government is likely to announce sales tax zero rating facility on the import and supply of construction material by investors of Export Processing Zone (EPZ) Gwadar or development of the infrastructure through amendment in the zero rating SRO.549(I)/2008. The Federal Board of Revenue (FBR) has also given permission to export upto 50 percent of the production from zone to tariff area of the country on payment of normal duties rates.
Sources told Business Recorder on Wednesday that the amendment in the SRO.549(I)/2008 would be made after vetting by the Law and Justice Division to allow sales tax zero rating on import and supply of construction material by EPZ investors. The construction materials may be incorporated in the SRO.549(I)/2008, which deals with the goods on which sales tax shall be charged at the rate of zero per cent.
Details revealed that the government has granted a number of incentives to the EPZ, Gwadar. Firstly, the Cabinet decision of June 3, 2009 regarding "Package of Incentives for Export Processing Zone Gwadar" has been implemented vide SRO No 606(I)/2009. Through this notification, tax holiday for 10 years from the commencement of commercial operation of the project has been granted to EPZ Gwadar.
Secondly, the FBR has also granted permission to export upto 50% of the production from zone to tariff area of the country on payment of usual duties. The summary for the Cabinet dated June 2, 2009 submitted by Ministry of Industries & Productions regarding package of incentives for EPZ Gwadar relating to Export Wing has been implemented by issuing SRO.600(I)/2009 amending the Customs Rules, 2001.
Thirdly, all exports from Pakistan are zero-rated for the purpose of sales tax under section 4 of the Sales Tax Act, 1990 and this facility is available to all including projects established in Export Processing Zones without any discrimination. Fourthly, presently SRO.11(I)/2008 of February 06, 2008 provides exemption from sales tax for a period of 40 years on the import and supply of materials and equipment for construction and operation of Gwadar Port and Development of Free Zone for Gwadar Port and Ship Bunker Oils bought and sold to the ships calling on/visiting Gwadar Port.
Similarly, supply of raw materials, components and goods for further manufacturer of goods in the Export -Processing Zones and import or supply made to Gwadar Economic Zones excluding vehicles are zero-rated vide S.No 5 and 8 of Fifth Schedule of the Sales Tax Act, 1990 respectively. Moreover, SRO 551(I)/2008 provides exemption on import of machinery, equipment and materials either for exclusive use within the limits of Export Processing Zone or for making exports there from and goods imported for warehousing purpose in Export Processing Zone.