The federal cabinet has approved legislative changes to address a longstanding issue of tax concessions for Gwadar Port and Gwadar Free Zone.
The move came, earlier this week, just days before Prime Minister Imran Khan's departure for a three-day visit to China on Monday, where he would discuss with the Chinese leadership several affairs, including the China-Pakistan Economic Corridor and the Kashmir dispute, The Express Tribune reported.
The amendment made to settle the three-year-old issue with China came after a push from the National Development Council (NDC) that is chaired by the prime minister and Chief of Army Staff General Qamar Javed Bajwa is its member.
The government is expected to promulgate a presidential ordinance to bring these legal changes as the National Assembly is currently not in session.
The new tax concessions will be limited to only the Gwadar zone as the government has been unable to finalise a tax incentive package for the prioritised Special Economic Zones (SEZs) that are being set up under the China-Pakistan Economic Corridor (CPEC).
"The federal cabinet has approved legislative changes to grant tax concessions to Gwadar Free Zone and Gwadar Port," said Khusro Bakhtiar, Federal Minister for Planning and Development.
More From This Section
"Coastal development is the government's top priority and focus will be on Gwadar's development, which will usher in a new era of galvanised economic activities in Pakistan," the minister added.
China is developing Gwadar Port as a strategic and commercial hub under its Belt and Road Initiative.
In February 2013, China Overseas Port Holding Company Limited (COPHCL) took over operations of the port from a Singaporean company. The concession agreement included a tax holiday for both the operators of Gwadar Port and the businesses being set up there.
The cabinet approved income tax exemption for Gwadar Free Zone on the income of operating companies from port operations. The income tax holiday was also extended to China Overseas Port Holding Company Pakistan Private Limited, Gwadar Marine Services, and Gwadar Free Zone Company.
The cabinet also approved sales tax and federal excise duty exemptions on the import of machinery, equipment, and material either for use in Gwadar Free Zone or for export, subject to the condition that all such imports were made by investors of the free zone.
It approved tax exemptions for the businesses to be established in the Gwadar Free Zone area for a period of 23 years with effect from July 2016 on their packaging, distribution, stuffing and de-stuffing, CFS, container yard, warehousing including cool and cold rooms, transhipments, labelling, light-end assembly, re-assembly, imports, exports and their value addition, and all related commercial activities.