ISLAMABAD, May 20: The government has decided to provide 10- year tax exemption and reduce all rentals and security charges by 50 per cent for investments and commercial operations in the Export Processing Zones (EPZs).
A formal announcement to this effect would be made by Prime Minister Mir Zafarullah Khan Jamali in Karachi on May 22, sources in the Export Processing Zone Authority (EPZA) told Dawn on Tuesday.
Main focus of the new package is to reduce the cost of doing business in EPZs, simplifying the regulatory framework of EPZ management and improving its service standards.
A copy of the EPZ-package provided to Dawn suggests that government has allowed income tax exemption for 10 years from the date of commercial production and operation.
The investors’ registration fee of $1000 has also been abolished altogether and there will be no upfront cost on this account. Security fee of $250 per project has also been abolished. This service would be offered free of cost by the management. Similarly, the transfer fee of $250 per transfer deal has also gone.
To promote local investment simultaneously, Pakistani companies have been allowed to invest in local currency for joint ventures with foreign companies.
Income tax exemption would be given for five years on the salaries of foreign nationals employed by industrial units in the EPZs. In fact, this tax holiday was enjoyed by foreign companies under the 1997 investment policy but withdrawn later on.
The Export Processing Zone Authority (EPZA) has been authorized to enforce labour law in EPZs to eliminate lengthy documentation of labour department. Similarly, EPZA has been empowered to issue work permit to foreign nationals. This has been done to minimise the role of many agencies and give all such powers to a single agency, EPZA.
The penalty amount on Annual Ground Rent of sick and closed units in Karachi Export Processing Zone (KEPZ) for their revival provided they pay principal amount in three equal monthly instalments from the date of this announcement.
Similarly, the security deposit for industrial plot has been slashed by over 60 per cent, from $12 per sq. meter to $5 per sq. meter and for warehousing/trading plot from $35 per sq.meter to $20 per sq.meter.
One dollar charge per document has also been done away with. In future, EPZA will prescribe the format of documents to be freely printed and procured from the market at most competitive rates. Annual ground rent for industrial plot has also been reduced to $1.50 from $2.50 per sq. meter and for warehousing/ trading plot to $2.50 from $3 per sq.meter.
This rent could be further reduced to $1 when the business volumes sufficiently improves in the EPZs.
The excise cess of 0.5 per cent levied on EPZs by the government of Sindh has also been abolished. The registration charge of Rs1,000 for customs clearing agents has also been removed altogether. The government believed that there was no need for this charge because the customs clearing agents were already licensed by the collector of customs and their security deposit is already available with them.