Senate Committee Unanimously Passes Special Technology Zones Authority Bill, 2021

The Senate Standing Committee on Information Technology and Telecommunication unanimously passed on Tuesday the Special Technology Zones Authority Bill, 2021.

The Senate Committee meeting was held with Senator Kauda Babar in the chair at the Parliament House. The meeting proceedings started with a briefing from officials of the Ministry of IT & Telecom on the Special Technology Zones Authority Bill, 2021.

Officials explained that the Bill was important to provide institutional and legislative support for the technology sector with internationally competitive and export-oriented structures and ecosystems. They said it would help attract foreign direct investment, develop collaborative ecosystem connecting academia, research and technology industry, and initiate innovation in production systems and products. It would also increase the standards and quality of technology goods and services within the country, they added. “The Bill will help increase productivity and decrease the costs of production through high technology interventions, besides encouraging futuristic entrepreneurship,” they said, adding that it would also help create job opportunities for the educated youth of the country.

The Committee members, however, raised questions on the excerpts of the Bill. Senator Shahadat Awan suggested reviewing the Bill clause-by-clause in order to remove any lacunas in the legislation. Senator Palwasha Khan also expressed her reservations over the contents of the Bill and questioned the officials regarding the remuneration of employees and staff of the said authority. To this, the officials told the Committee members that all the pay scales were in accordance with directives of the Finance Division and nothing irregular was being done in this regard.

Senator Dr. Shahzad Waseem, who is also the Leader of the House of the Senate of Pakistan, underlined the urgency of the matter and urged that the Bill should be unanimously passed by the Committee on an urgent basis. He assured the opposition members of the Committee that any amendments proposed by them would be considered and taken up in the future.

Chairman Senator Kauda Babar urged the Committee members to look into the matter beyond party lines in the interest of the whole country.

Senator Afnan Ullah Khan of Pakistan Muslim League-Nawaz supported the legislation and termed the Bill as a very important step toward the development of IT sector in Pakistan.

The Committee members unanimously passed the Bill after due deliberations.

The meeting was also attended by Senators Seemi Eezdi, Zeeshan Khanzada, Sania Nishtar, Sana Jamali, Shahadat Awan, and Naseema Ehsaan alongside officials from the Ministry of IT and the Special Technology Zones Authority.

According to the object and reasons of the bill, to provide institutional and legislative support for national technology sector with internationally competitive and export-oriented structures and ecosystem, in addition to developing collaboration between academia, research and technology industry. This would help in creating jobs in the technology sector, capitalising on youth dividend.

According to clause 21 of “The Special Technology Zones Authority Bill, 2021”, “Exemptions and Incentives for zone enterprises, the following shall be the incentives for the zone enterprises from the date of issuance of license for a period of ten years, namely:-

1. Exemption from all taxes under the Income Tax Ordinance, 2001 including tm on profits and gains, income tax, turnover tax, withholding tax, capital gains tax, income tax on dividend income and withholding tax on dividend;
2. Exemption from sales tax under the Sales Tax Act, 1990;
3. Exemption from Customs Duty under the Customs Act 1969 on the import in Pakistan from all Capital Goods including but not limited to materials, plant machinery, hardware, equipment and software, devices, instruments, accessories, attachments, building materials, materials and any other equipment required to perform functions of the zone enterprises, whether or not manufactured locally, for use in zones;
4. Exemption from property tax;
5. Exemption on dividend income and capital gains of any venture capital fund (whether local or foreign) derived from investments in the zone enterprises;
6. permission for opening and maintaining of foreign currency accounts, availability of foreign exchange, full convertibility to foreign currency and repatriation and free transfer of foreign currency to meet the requirements of investors, lenders, contractors, operators, consultants, insurers, re-insurers, vendors and advisors in relation to any compensation amounts, loan repayments, equity and return on equity, profits, works, goods and services in accordance with the foreign exchange regulations of the State Bank of Pakistan for zones.”

According to clause 20 of the bill; Exemptions and Incentives for the Authority and for the zone developers, the following shall be the incentives for the Authority and zone developers from the date of signing of the Development Agreement, for a period of ten years namely:-

1. Exemption from all taxes under the Income Tax Ordinance, 2001 including tax on profits and gains, income tax, turnover tax, withholding tax, capital gains tax, income tax on dividend income and withholding tax on dividend;
2. Exemption from sales tax under the Sales Tax Act, 1990;
3. Exemption from Customs Duty under the Customs Act 1969 on the import in Pakistan of all Capital Goods including but not limited to materials plant, machinery, hardware, equipment and software, devices, instruments, accessories, attachments, building materials, materials and any other equipment required to perform functions of the Authority, zones and zone developers, whether or not manufactured locally, for use in zones;
4. Exemption from property tax;
5. Exemption on dividend income and capital gains of any venture capital fund (whether local or foreign) derived from investments in the zone developers; and
6. permission for opening and maintaining of foreign currency accounts, availability of foreign exchange, full convertibility to foreign currency and repatriation and free transfer of foreign currency to meet the requirements of investors, lenders, contractors, operators, consultants, insurers, re-insurers, vendors and advisors in relation to any compensation amounts, loan repayments, equity and return on equity, profits, works, goods and services in accordance with the foreign exchange regulations of the State Bank of Pakistan for zones.