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ISLAMABAD: The federal cabinet on Wednesday restored the tax exemption status of tribal areas as part of the government’s strategy to extend benefits to people.

“No sales tax will be charged on electricity bills of domestic, commercial and industrial consumers in Fata,” Minister for Information Ali Zafar briefed media after the cabinet meeting.

Mr Zafar said no sales tax and income tax will be levied in the Federally Administered Tribal Areas (Fata) for the next five years. The provincial governor would issue an ordinance in the next two days to settle legal matters regarding Fata’s merger with Khyber Pakhtunkhwa.

On May 31, the government formally announced the merger Fata and Provi­ncially Administered Tribal Areas (Pata) with the Khyber Pakhtunkhwa province.

The announcement was followed by confusion for both individuals and business community who were not clear about the status of taxes in erstwhile Fata and Pata.

To resolve these issues, Prime Minister Nasir ul Mulk had constituted a committee to facilitate the merger of Fata. The committee, chaired by the prime minister, held several meetings with different stakeholders.

In the light of the committee’s recommendations, the cabinet also decided that income tax on profit would not be collected in Fata.

The information minister said notifications are being finalised to implement these issues. However, the exemptions will only be available to existing manufacturers while the new comers into the manufacturers will be subject to taxes in Fata, he added.

The information minister also announced that tax exemptions announced for Fata in the tenure of previous government would be implemented as part of the merger plan of tribal areas into Khyber Pakhtunkhwa.

As per the PML-N government decisions, Fata and Pata will remain exempt from income tax on profits and gains of existing business conducted by individuals for a period of five years. However, businessmen were asked to register themselves with Fata till September 30, 2018.

Similarly, sales tax exem­pted on retailers to facilitate the general consumers. Similarly, excise duty status will also remain the same as was before the merger.

Moreover, duty-free vehicles will be allowed for a period of five years ending on June 30, 2023. These vehicles will be restricted to Fata and Pata territories. It was also decided that on expiry of the duty date these vehicles can be regularised on payment of due duty and taxes.

Published in Dawn, July 19th, 2018