Abbasi-led govt approved loads of tax exemptions

ISLAMABAD: The Abbasi-led administration has granted tax exemptions for petroleum and gas sectors and large-scale diameter gas pipeline projects, official sources told Business Recorder.

Giving the background, the sources said, the ECC while considering the Petroleum Division’s summary of November 10, 2017 regarding exemption of   taxes and duties (gas infrastructure development projects of large diameter pipelines) had constituted a committee comprising Secretary Finance Division (Convener), Secretary Petroleum Division, and Chairman, FBR to review the issue holistically and submit a report thereof to the ECC for consideration.

As a follow-up to the decision taken in the ECC meeting, various meetings were held among the officials of FBR, Petroleum Division and ISGSL. After a comprehensive and thorough deliberation FBR agreed to bring the sales tax and custom duty exemptions for gas infrastructure development projects of large diameter i.e. 24 or above parallel to the exemptions available to E & P sector under SRO 678, however, reduction in the custom duty exemption to zero percent was not agreed.

On the issue of 10-year tax holiday for North South Gas Pipeline Project (NSGP), its contractors and sub-contractors from all types of income taxes, ie, corporate tax, minimum tax, alternate corporate tax, all types of withholding taxes and tax on remittance of profits by branches of non-resident contractors and sub-contractors, pertaining to the project, was not agreed by FBR.

The Petroleum Division requested the ECC for approval of the following proposals: (i) exemption from customs duty in excess of 5% ad valorem leviable under the first schedule to the Customs Act, 1969 and whole of sales tax leviable under the Sales Tax Act, 1990 on import and subsequent supply of plant, machinery, equipment, materials, specialized vehicles or vessels, accessories, spares, chemicals and consumables, as are not locally manufactured by developers, contractors and service companies of North South Gas Pipeline Project (NSGP), Turkmenistan, Afghanistan, Pakistan and India Pipeline Project (TAPI), Iran-Pakistan Gas Pipeline Project (IP), RLNG-III Pipeline Project (RLNG-III) or any other project declared as “Large Diameter Gas Pipeline Project” by the Ministry of Energy (Petroleum Division);(ii) exemption from customs duty in excess of 10% ad valorem leviable under the first schedule to the Customs Act, 1969 and whole of sales tax leviable under the Sales Tax Act, 1990 on import and subsequent supply of plant, machinery, equipment, materials, specialized vehicles or vessels, accessories, spares, chemicals and consumables, as are locally manufactured by developers, contractors and service companies of above projects; (iii) exemption from whole of customs duty and sales tax on import and subsequent supply of HR Coils, Line Pipe, Pylons/Piles, whether or not manufactured locally, by the developers and contractors of above projects; and (iv) exemption from duties and taxes on import of machinery, equipment, vessels, dumpers, specialized vehicles, accessories and spares and all other items essentially required for the above projects on import-cum-export basis for a period of five years, further extendable on payment of 1 percent surcharge per year.

The sources said, the government considered the proposal at a high-level committee and approved exemption from income tax, sales tax and customs duty for petroleum and gas sectors and for large diameter gas pipeline projects.—MUSHTAQ GHUMMAN