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ISLAMABAD: The government has announced special incentives in the budget for manufacturing, agriculture and construction sectors.
All manufacturing units set up between July 1, 2015, and June 30, 2018, in Khyber Pakhtunkhwa will be exempted from income tax and turnover tax for five years.
Exports of fruits, vegetables, dairy products and meat from KP to Afghanistan will be allowed against Pakistani currency instead of dollars.
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Quota for ghee and vegetable oil under the Duty and Tax Remission for Exporters Scheme for export to Afghanistan and Central Asia has been enhanced from 1,000 tons per 90 days to 1,000 tons per month.
Although minimum income tax is leviable under the existing law, suitable amendments shall be made to address the hardship of KP businessmen.
A special financial package of Rs64.15 billion has been approved for the textile sector to double exports and create three million jobs by 2019.
The government has proposed a number of incentives for the agriculture sector.
The agricultural delivery chain, which includes warehousing facilities for storage of produce, will get a three-year tax holiday. The companies that set up ‘halal’ meat production plants and obtain ‘halal’ certification by Dec 31, 2016, will be exempted from income tax for four years.
Rice mills will be exempted from minimum tax for the tax year 2015.
Exemption from withholding tax on supply of agricultural produce has been proposed to be extended to supply of fish.
In order to promote farm mechanisation and raise productivity, it has been proposed that non-adjustable sales tax at a reduced rate of 7 per cent, instead of the existing 17pc, may be charged on the local supply and import of certain agricultural equipment used in tillage and seed-bed preparation, seeding or planting, irrigation, drainage and agro-chemical application.
Customs duty, sales tax and withholding tax on import of agricultural machinery will be reduced to 9pc from the current aggregate of 28pc to 43pc.
Farmers with landholdings up to 12.5 acres will receive interest-free loans for setting up solar tubewells.
The government announced suspension of minimum tax on builders.
The minimum tax on builders leviable for the business of construction and sale of residential and other buildings is proposed to be exempted till June 30, 2018. Certain incentives were announced for Real Estate Investment Trust (REIT) development schemes, such as income tax exemptions on the capital gains on selling property to a REIT development scheme up to June 30, 2018.
It was proposed that if a REIT scheme for development of the housing sector is set up by June 30, 2018, the income tax for the first three years will be reduced by 50pc.
Supply of bricks and crushed stone may be exempted from sales tax up to June 30, 2018, while reduction in customs duty on import of construction machinery is proposed.
Domestic production of solar and wind energy equipment manufacturing is proposed to be granted a five-year tax exemption.
Imported or leased aircraft, maintenance kits for trainer aircraft, spare parts for use of aircraft, trainer aircraft and simulator and aviation simulators by recognised airline company will be exempted from customs duty and sales tax.
Air routes in Gilgit-Baltistan, Makran coastal belt, Azad Jammu and Kashmir, Chitral and Fata will be exempted from payment of excise duty and withholding tax.
Ex-Im Bank of Pakistan (specialised DFI) will be set up to promote exports. It will help raise export credit and reduce cost of borrowing for exporters on a long-term basis and help reduce their risks through export credit guarantees and insurance facilities.
Pakistan Land Port Authority will be established at Torkham border to enable it to operate on the lines of a modern port.
Published in Dawn, June 6th, 2015
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