The federal government has given a 10-year tax exemption to Zone developers and enterprises through passing the Special Technology Zone Authority Act, 2021, from the National Assembly.
Documents state that the government has given all kinds of income tax exemption under the income tax ordinance, including the tax on profits and gains, income tax, turnover tax, withholding tax, capital gain tax, income tax on dividend income, and withholding tax on dividends.
Similarly, the government also allowed sales tax exemption under the Sales Tax Act 1990 and Customs duty under the Customs Act 1969 on the import of all capital goods in Pakistan.
Furthermore, exemption from property tax and dividend income, as well as a capital gain for any venture capital fund derived from the investment in the zone developers and enterprises, have also been allowed.
Besides, permission for opening and maintaining of foreign currency account, availability of foreign exchange, full convertibility to foreign exchange, and repatriation and free transfer of foreign currency to meet the requirements of investors, lenders, contractors, operators, consultants, insurers, reinsurers, vendors and advisors in relation to any compensation amount, in accordance with the foreign exchange regulations of State Bank of Pakistan, has also been granted.
For the avoidance of doubt, co-zones developers shall be entitled to the exemptions and incentives from the date of issuance of a license for the period of 10 years, the document states.
The government termed the Zones a particular class or type of zone which may be geographical or virtual, new or existing, or expansion of an existing zone as approved or notified by the authority under the rules, including but not limited to special technology zones, information technology parks, high-tech industrial areas, software as well as hardware technology parks, technology export zones, free technology zones, science and technology parks, information technology zones, science and technology zones, R&D zones, opportunity zones, innovation zones, technology development zones, knowledge parks, smart cities, knowledge cities, and technology incubation zones.
It is pertinent to note that the National Assembly has passed the Special Technology Zone Authority Act, 2021 in the last sitting, and this bill would be tabled to the upper house of parliament.
The federal government wants to ensure the development of the scientific and technological ecosystem through the development of zones to technology development in the country, the document added.
In addition, the aim of this law is to attract foreign direct investment, developing collaboration between academia and the technology industry besides increasing productivity and decreasing the costs of production through high-tech interventions, intensive innovation, and futuristic entrepreneurship not only to enable job creation but to commercialize technological knowledge.