July 1, 2015 to June 30, 2018: Tax holiday allowed to new manufacturing units in KP & Balochistan

The tax holiday to new manufacturing units in Khyber Pakhtunkhwa and Balochistan is strictly allowed to those units which are set up between July 1, 2015 to June 30, 2018 and which are not established by splitting up or reconstruction or reconstitution of existing undertakings or by transfer of machinery or plant from an undertaking established before July 1, 2015.
Through an income tax circular 2 of 2015 issued by the Federal Board of Revenue (FBR), the Board has explained income tax holiday for new manufacturing units set up in Khyber Pakhtunkhwa and Balochistan. [Clause (126L) of Part I of the Second Schedule and sub-clause (xxv) of clause (11A) of Part III of Second Schedule.]
In order to encourage setting up new manufacturing units in the provinces of Khyber Pakhtunkhwa and Balochistan a five-year income tax holiday has been allowed to a taxpayer deriving profit and gains derived from new manufacturing units set up in the province between 1st July, 2015 to 30th June, 2018 beginning with the month in which the industrial undertaking is set up or commercial production is started, whichever is later.
The said exemption is strictly allowed to those manufacturing units which are set up between the above mentioned dates and which are not established by splitting up or reconstruction or reconstitution of existing undertakings or by transfer of machinery or plant from an undertaking established before 1st July, 2015 in Pakistan. Besides the above manufacturing units excluding manufacturers and suppliers of cement, sugar, beverages and cigarettes have also been granted exemption of minimum tax under section 113 of the Ordinance, the FBR added.
The FBR said that in order to attract the private sector investment in Transmission Line Projects, Income Tax holiday for ten years has been allowed to a taxpayer deriving profit and gains from Transmission Line Projects set up in the province between 1st July, 2015 and 30th June, 2018. However, for claiming the tax exemption, the taxpayer company should fulfil the followings conditions:
First, the projects shall be owned and managed by a company formed for operating the said project.
Secondly, the company shall be registered under the companies Ordinance, 1984.
Thirdly, it shall have its registered office in Pakistan.
Fourthly, the company is not established by splitting up or reconstruction or reconstitution of an already existing business or by transfer to a new business of any machinery or plant used is a business which was being carried on in Pakistan at any time before the commencement of the new business.
Fifthly, the federal government or a Provincial Government or a Local Government should not own fifty percent or more shares in the said company. Sixthly, the company should not be controlled by Federal Government or a Provincial Government or a Local Government.
The FBR has also explained the tax exemption to industrial undertaking engaged in manufacturing of cellular phones (126N). All profits and gains derived by a taxpayer has been exempted from tax for a period of five years, from the month of commencement of commercial production if it is an industrial undertaking, duly certified by the Pakistan Telecommunication Authority, engaged in the manufacturing of cellular mobile phones. This facility is available if the industrial undertaking has been set up and commercial production has commenced between the first day of July, 2015 and the thirtieth day of June, 2017 and the industrial undertaking is not formed by the splitting up, or the reconstruction or reconstitution, of a business already in existence or by transfer to a new business of any machinery or plant used in a business which was being carried on in Pakistan, the FBR added.