ISLAMABAD: The Federal Board of Revenue (FBR) will withdraw exemption of turnover tax for Special Economic Zones (SEZs) through the next Finance Bill.

FBR Member Customs (Policy) informed the Senate Standing Committee on Finance on Wednesday that the turnover tax would be imposed on industries located in the industrial zones across the country.

The Zones Enterprises operating in the SEZs can avail 10-year income tax holiday and one-time duty exemption on plant & machinery and capital goods as envisaged in the SEZ Act 2012. Pakistan is under the International Monetary Fund (IMF) program and need to withdraw exemptions/con-cessions and would abolish 1.2 percent turnover tax even for the industries located in the SEZs, the FBR officials maintained.

The exemption of turnover tax has been withdrawn for other sectors in the past and the same policy would be applicable for the units operating in the SEZs, the FBR officials added.

Key postings, transfers in FBR notified

The committee was informed that Special Economic Zones (SEZ) Act, 2012 was made for establishment, development and efficient operation of SEZs providing a legal and regulatory framework to encourage domestic and international investors for promotion and establishment of industrial infrastructure and for other related matters.

To incentivize such investment, the said Act provides certain fiscal and allied benefits to the SEZ investors, ie, Zone Enterprises and Zone Developers. One such fiscal incentive, is “Exemption from all taxes on income,” given to both Zone Develo-per and Zone Enterprises under sections 36 & 37 of the said Act.

Senator Faisal Saleem informed the committee that the smuggling is increasing due to delay in opening of the LCs of the importers. The said viewpoint was endorsed by the FBR officials present in the meeting. The committee was further informed that the SEZ committee is responsible for examination and approval of the Zone Enterprise Entry and allotment applications in accordance with the SEZ laws.

The simultaneous approval of the Zone Enterprise and Allotment of plot is made by the SEZ committee. Having Zone Enterprise status allows an allottee to avail tax benefits as envisaged in the SEZ Act.

Copyright Business Recorder, 2022