WASIM IQBAL

ISLAMABAD: Board of Investment (BoI) on Wednesday notified the Special Economic Zone (SEZ) status to three industrial parks in Sindh as well as proposed a reduction in the number of provincial taxes.

The notification states in pursuance of clause (b) of section 6 of the Special Economic Zone Act 2012 (XX of 2012) read with sub-section (4) of section 7 thereof, the Board of Approval (Board of Investment) is pleased to accord Special Economic Zone status to Bin Qasim Industrial Park and Korangi Creek Industrial Park from July 22, 2014.

The Board of Approval has also approved Special Economic Zone status to Khairpur Industrial Estate effective from February 11, 2014.

The SEZs Act was approved during Pakistan People’s Party government. However, the present government has made amendments in the SEZs Act through a presidential ordinance which would be presented before the Parliament as an amendment bill at a later stage, sources said.

The Board has also proposed that the federal government directs the provincial government to minimize the number of provincial taxes so that foreign and domestic investors could be facilitated. The World Bank’s ‘Ease of Doing Business’ Report 2015 indicates that the provincial taxes have been increased in current year as compared to last year. Subsequently, the ranking of Pakistan on ‘paying tax’ further declined to 172 from 168 in 2014.

BoI has devised a mechanism to address two major concerns of foreign and domestic investors: one to reduce the number of taxes to be paid by the investors and two to minimize the process of acquiring construction permits. In an exclusive talk with Business Recorder, Chairman BoI Dr Miftah Ismail said that majority of provincial taxes are less than one percent of total royalty of province. Quoting examples, he said that Balochistan is annually collecting Rs 3 million from a single provincial tax. The Khyber Pakhtunkhwa government is earning Rs 50 million from small taxes. In Punjab, provincial government is earning Rs 200 million to Rs 300 million. Small level tax collection in Sindh is also insignificant, he added. He said the Board is compiling data from four provinces of the number of taxes collected in small volume paid for by the investors.

Chairman BoI maintained that the federal government has agreed that electricity, dealing with construction permits and paying taxes should be the government’s top priority.

He said the decision to reduce provincial taxes in number was taken in a consultative meeting of BoI and FBR with all the chambers of commerce and foreign trade bodies. Minister for Finance, Ishaq Dar chaired the meeting.

Currently, investors are paying corporate income tax, social security contributions, employer paid pension contributions, education cess, property tax, tax on interest, professional tax, vehicle tax, fuel tax, goods and sales tax and stamp duty.