ISLAMABAD: The Senate Standing Committee on Information Technology and Telecommunication on Tuesday passed “Special Technology Zones Authority Bill, 2021” unanimously under which an Authority would be set up 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 committee met with Kauda Babar in the chair here on Tuesday.
Officials from Ministry of Information Technology and Telecommunication briefed committee members regarding Special Technology Zones Authority Bill, 2021.
Officials explained that it is important to provide institutional and legislative support for the technology sector with internationally-competitive and export-oriented structures and ecosystems.
In order to attract foreign direct investment, develop collaborative ecosystem connecting academia, research and technology industry, initiating innovation in production systems and products and to increase the standards and quality of technology goods and services within the country.
This will help increase productivity and decrease the costs of production through high-tech interventions and encourage futuristic entrepreneurship.
It will also help enable job opportunities for educated youth of the country.
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 youth dividend.
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) 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.
Committee members raised questions on the excerpts of the bill.
Senator Shahadat Awan suggested reviewing the bill clause by clause in order to remove any lacunas in the legislation.
Chairman Committee Senator Kauda Babar urged the committee members to look into the matter beyond party lines in interest of the whole country.
Senator Afnan Ullah Khan of the PML-N supported the legislation and termed the bill as a very important step towards development of the IT sector in Pakistan.
Committee members unanimously, passed the bill after due deliberations.
Meeting was attended by senators, Dr Shahzad Waseem, Seemi Eezdi, Zeeshan Khanzada, Sania Nishtar, Sana Jamali, Palwasha Muhammadzai Khan, Shahadat Awan, Afnan Ullah Khan, Naseema Ehsaan, and officials from the Ministry of Information Technology and the STZ Authority.
Copyright Business Recorder, 2021
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