Pakistan’s ministry of commerce has allowed zero-rating of sales tax on exports of PVC and PMC materials produced in Export Processing Zones, manufacturing bonds, and export-oriented units. The ministry issued SRO 351(I)/2020 dated May 04, 2020, signifying the amendment. The SRO also amended the negative list for export to Afghanistan.
Separately, the Pakistan Business Council (PBC), in its proposals for the 2020/2021 budget, suggested an exclusion from a tax deduction on local supply under section 153 and an exemption from collection of withholding tax on plant, machinery, and raw material imports under section 148.
The Finance Supplementary Second Amendment Act 2019 issued in March last year granted a similar exemption from tax under section 148 but only to the greenfield industries. PBC called for the same exclusion for the brownfield expansion.
PBC said that procedures and rules to obtain exemption certificates of those taxes hindered investments for brownfield capacity expansion. Hence, the waiver should attract foreign direct investment in new expansion ventures and partnerships, which can result in export growth.
