Federally Administered Tribal Areas (FATA) and Provincially Administered Tribal Areas’ (PATA) residents are set to enjoy tax exemptions for five years. The proposal is part of the FATA reforms that K-P government is conducting on the directives of the federal government.
The residents of FATA and PATA will be exempted from paying the following taxes:
- Income tax,
- Customs duty on non-custom paid (NCP) vehicles,
- Sales tax,
- Agriculture income tax along with Abyana for five years.
Khyber-Pakhtunkhwa (K-P) finance secretary along with the Income Tax Chief Commissioner and Peshawar Customs Collector forwarded the recommendation to the federal government’s committee on FATA reforms.
The K-P Revenue Authority will perform the duties of the collecting agency in the areas.
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The Reforms
The areas in question were recently merged with Khyber Pakhtunkhwa. The federal government decided to give some incentives and relief to the residents of these areas, starting from tax exemption.
Apart from the above-mentioned tax exemptions, these areas will not be exempted from federal excise duty on imports and exports.
Along with the exemption of customs duty on NCP vehicles, the K-P committee recommended extending the deadline to register such vehicles by three months.
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The committee also recommended exempting domestic consumers from paying sales tax on electricity. The committee further asked the federal government to discuss exemptions for commercial consumers as well.
However, the committee added that the exemption of sales tax on electricity for industrial consumers will be more complicated.
It added:
The five ghee mills in Dargai and 11 steel re-rolling mills in the Malakand District may object to the imposition of sales tax on electricity. Granting exemption to these units, though, may result in protest from the rest of the industry in K-P, therefore, this demand may be resisted.
The recommendations add that “the government may, however, grant exemptions separately to special economic zones or industrial estates as the case may be.”
The income tax will be exempted as well and the deadline for registration will be extended to June 30, 2019, from the current date of 30th September 2018. Any income that is being generated form FATA/PATA will be exempted from income tax as well.
The salaried individuals working – not necessarily residents – in FATA will be exempted from paying the withholding tax. The withholding tax on imports and exports will be charged as no exemptions will be made there.
