This package is one of the most significant government initiatives to be introduced since the Prime Minister assumed the office in May 2013. The Prime Minister has also set up a “Prime Minister’s Business Advisory Council”, which will meet quarterly to discuss how to implement economic policy decisions. While implementation details of the new policy are still being developed, this article outlines the highlights of interest to foreign investors.
An attractive incentive program is introduced for investments in new industries in:
- “Green field” industrial and expansion projects (i.e., involving the construction of facilities where none previously existed)
- Captive power plants
- Low-cost housing
- Mining and quarrying in the Thar coal project
- Mining projects in the provinces of Balochistan and Khyber Pakhtunkhwa.
For investors who set up an industry in these sectors on or after 1 January 2014, there would be no scrutiny of the source of investment, subject to illicit funds scrutiny discussed below.
The government has clarified that these incentives are not available to certain sectors that are overcrowded with existing operations or are considered anti-social. These sectors include arms and ammunition, explosives, fertilizers, sugar, cigarettes, aerated beverages, cement, textile spinning units, flour mills, and vegetable ghee and cooking oil. Moreover, the incentives are subject to the laws that regulate illicit funds under Pakistan’s Narcotic Act, Anti-Terrorist Act and Anti-Money Laundering Act.
Significant new tax incentives are as follows: