NA passes Special Technology Zones Authority Bill: Zone developers to get 10-year tax holiday

ISLAMABAD: The National Assembly Friday passed "The Special Technology Zones Authority Bill, 2021" to set up an authority to boost the domestic IT sector and attract foreign direct investment in the country by giving 10-year tax exemption to zone developers and enterprises.

The National Assembly also passed the "The Islamabad Capital Territory Senior Citizens Bill, 2021" to provide protection socially and economically to the senior citizens of Islamabad. Advisor to the Prime Minister on Parliamentary Affairs, Babar Awan tabled the two bills separately in the house for passage.

The House passed the bills with majority.

According to clause 21 of "The Special Technology Zones Authority Bill, 2021", "Exemptions and Incentives for zone enterprises:-The following shall be the incentives for the zone enterprises from the date of issuance of license for a period of ten years, namely:- (a) Exemption from all taxes under the Income Tax Ordinance, 2001 including tm on profits and gains, income tax, turnover tax, withholding tax, capital gains tax, income tax on dividend income and withholding tax on dividend; (b) Exemption from sales tax under the Sales Tax Act, 1990; (c) Exemption from Customs Duty under the Customs Act 1969 on the import in Pakistan from all Capital Goods including but not limited to materials, plant machinery, hardware, equipment and software, devices, instruments, accessories, attachments, building materials, materials and any other equipment required to perform functions of the zone enterprises, whether or not manufactured locally, for use in zones; (d) Exemption from property tax; (e) Tax exemption on dividend income and capital gains of any venture capital fund (whether local or foreign) derived from investments in the zone enterprises; and (f) permission for opening and maintaining of foreign currency accounts, availability of foreign exchange, full convertibility to foreign currency and repatriation and free transfer of foreign currency to meet the requirements of investors, lenders, contractors, operators, consultants, insurers, re-insurers, vendors and advisors in relation to any compensation amounts, loan repayments, equity and return on equity, profits, works, goods and services in accordance with the foreign exchange regulations of the State Bank of Pakistan for zones."

According to clause 20 of the bill; Exemptions and Incentives for the Authority and for the zone developers.- (l ) The following shall be the incentives for the Authority and zone developers from the date of signing of the Development Agreement, for a period of ten years namely:- (a) Exemption from all taxes under the Income Tax Ordinance, 2001 including tax on profits and gains, income tax, turnover tax, withholding tax, capital gains tax, income tax on dividend income and withholding tax on dividend; (b) Exemption from sales tax under the Sales Tax Act, 1990; (c) Exemption from Customs Duty under the Customs Act 1969 on the import in Pakistan of all Capital Goods including but not limited to materials plant, machinery, hardware, equipment and software, devices, instruments, accessories, attachments, building materials, materials and any other equipment required to perform functions of the Authority, zones and zone developers, whether or not manufactured locally, for use in zones; (d) Exemption from property tax; (e) Exemption on dividend income and capital gains of any venture capital fund (whether local or foreign) derived from investments in the zone developers; and (f) permission for opening and maintaining of foreign currency accounts, availability of foreign exchange, full convertibility to foreign currency and repatriation and free transfer of foreign currency to meet the requirements of investors, lenders, contractors, operators, consultants, insurers, re-insurers, vendors and advisors in relation to any compensation amounts, loan repayments, equity and return on equity, profits, works, goods and services in accordance with the foreign exchange regulations of the State Bank of Pakistan for zones.

According to object and reasons of "The Islamabad Capital Territory Senior Citizens Bill, 2021", "It is the duty of the State to provide protection, either directly or by means of institutions established to provide financial assistance to senior citizens."

"Every person has the inherent right to a healthy and comfortable home, healthy diet, adequate clothing, care of physical and moral health, as well as right to means of recreation, work' stability and respect."

"This Bill aims to socially and economically protect the senior citizens of Islamabad. In this respect it aims to establish a Fund for these senior citizens as well as build and maintain old-age homes for the indigent senior citizens. It also creates a Council, including members from all relevant departments of the Government that shall ensure that all possible steps and acts are taken to provide for the well-being, comfort and dignity of these senior citizens."

The Special Technology Zones Authority Bill, 2021 gives incentives to the technology zone developers.

The developers would be exempt from all customs duties and taxes for a period of 10 years from the date of signing of a development agreement on capital goods, including but not limited to materials, plant, machinery, hardware, equipment and software, imported into Pakistan for consumption within zones by the authority and zone developers.

It would also give tax exemption to zone enterprises.

The legislation would also provide facility of exemption from all customs duties and taxes on capital goods for a period of 10 years from the date of issuance of licence by the authority.

According to object and reasons of the bill, to provide institutional and legislative support for national technology sector with internationally competitive and export-oriented structures and ecosystem, in addition to developing collaboration between academia, research and technology industry.

This would help in creating jobs in the technology sector, capitalising on our youth dividend.

Creation of the Authority will also build an environment, which would attract foreign direct investment, apart from improved quality of domestic technology products and services and fostering innovation.

This would help create jobs in the technology sector and capitalise on youth dividend.

The creation of the authority would also provide an environment, which would attract foreign direct investment, apart from improving the quality of domestic technology products and services, and fostering innovation.

According to object and reasons of "The Islamabad Capital Territory Senior Citizens Bill, 2021", "It is the duty of the State to provide protection, either directly or by means of institutions established to provide financial assistance to senior citizens."

"Every person has the inherent right to a healthy and comfortable home, healthy diet, adequate clothing, care of physical and moral health, as well as right to means of recreation, work' stability and respect."

"This Bill aims to socially and economically protect the senior citizens of Islamabad. In this respect it aims to establish a Fund for these senior citizens as well as build and maintain old-age homes for the indigent senior citizens. It also creates a Council, including members from all relevant departments of the Government that shall ensure that all possible steps and acts are taken to provide for the well-being, comfort and dignity of these senior citizens."

Copyright Business Recorder, 2021