Muhammad Umair Zeb
The federal Cabinet has approved Promotion Package for Industry (PPI) offering incentives for investment in new and existing industrial undertakings, for the revival of sick units, and for investment in industries by non-resident and resident Pakistanis having declared foreign assets. This promotion Package for Industry also includes an amnesty for industry and investors.
The Cabinet has approved through circulation, the Promotion Package for Industry-Promulgation of Ordinance for Amendments in the Income Tax Ordinance 2001 Via Income Tax Amendment Ordinance 2022, Muhammad Umair Zeb told to the Frontier Post.
Muhammad Umair, the Tax Expert further elobrate that according to the source, the Federal Board of Revenue (FBR) has moved a summary to the Cabinet which said that incentivization of capital investment into various industrial sectors is common to most tax systems. Pakistan has also provided tax incentives to the industrial sector through the introduction of Special Economic Zones (SEZs), Export Processing Zones (EPZs), and Special Technology Zones (STZs).
There may, however, be a need to extend similar benefits to all geographic areas in Pakistan and also envisage the entrepreneurs to invest in industrial undertakings out of their undisclosed assets so that employment is generated and sick industrial units are revived. It is also imperative to incentivize non-resident Pakistanis and resident Pakistani individuals to repatriate their foreign exchange into Pakistan and invest in the industry.
Umai Zeb, The Tax expert said that the matter of extending a PPI sponsored by the Ministry of Industries & Production (MoIP) came under discussion in a meeting chaired by Prime Minister Imran Khan on 25 January and was approved in principle.
The broad contours of the PPI were shared by the MoIP with the Federal Board of Revenue (FBR) and also discussed.
The PPI has the following three strands:
- Incentives for investment in new and existing industrial undertakings;
- Incentives for the revival of sick units;
- Incentives for investment in industries by non-resident Pakistanis and resident Pakistani individuals having declared foreign assets.
The salient features of the PPI strands are as under:
Incentives for Setting up New Industries
Under the PPI, a five percent across-the-board tax rate will immune the investor from probe about his sources of investment as provided under the Income Tax Ordinance, 2001. The investor will establish a new industrial undertaking through the creation of a new company. Similarly, the existing units can avail the facility for balancing and modernization. The cutoff date for filing such declarations will be 31 December 2022, with the condition to start commercial production in the new unit by 30 June 2024.
Incentives for Revival of Sick Units
The PPI provides that the companies returning a net loss in the last three years will be eligible to be acquired through acquisition (not amalgamation) by a healthy profit-making company, which will be incentivized to adjust the sick company’s tax losses for the next three years.
Tax incentives for Foreign Investment
The PPI further provides that if eligible non-resident Pakistanis and resident Pakistani individuals repatriate their declared foreign assets into Pakistan for investment into industry, they will be entitled to 100 percent tax credit for the next five years.
Under Rule 16(1)(b) of the Rules of Business, 1973, cases relating to promulgation of an Ordinance are required to be brought before the Cabinet. The source said that the Cabinet has approved the summary for the PPI.
