1. Existing Facilities.
Key features of existing policies, incentives and facilities.

2. Investment Policy of 1997.
a) Policies:
1. Services/Infrastructure Sectors
2. Social Sectors
3. Agriculture Sectors
b) Incentives:
1. Fiscal (Tax Relief).
2. Re-investment allowance.
3. Industrial Building Depreciation Allowance.

3. Protection to Domestic Manufacturing.

4. Protection to Foreign Investment.

5. Holding Companies.

6. Others
GUIDELINES ON FOREIGN INVESTMENT
1. EXISTING FACILITIES
KEY FEATURES OF EXISTING POLICIES, INCENTIVES AND FACILITIES
Prior to the announcement of Investment Policy, 1997 following facilities were available to the foreign investors:-

A) POLICIES
1. Foreign investors are allowed participation in industrial projects on 100 percent equity basis, without any permission of the Government.
2. No government sanction is required for setting up an industry in any field, place and size, except for the following four industries:-

• Arms and ammunitions.
• High explosives.
• Radio-active substances.
• Security printing, currency and mint (establishment of new units for the manufacture of alcohol, except industrial alcohol, is banned).
3. There is no requirement for obtaining No Objection Certificate (NOC) from the provincial government for locating the project any where in the country except the areas which are notified as negative areas.
4. Foreign companies are allowed to undertake export and import trade (for selling to whole sellers/distributors.)
5. Hotels & Tourism have been declared as an Industry/Industrial undertaking. Therefore, this sector is already open to foreign investment and is entitled to incentives and concessions as admissible under the Tourism Policy.
B) INCENTIVES

Major existing tariff and fiscal incentives for manufacturing sector are as follows:-
a) TARIFF
- Maximum Tariff Rate : 45%
- Number of Slabs : 5
with Rates of : 10%,15%,25%,35% & 45%
- Imported Plant & Machinery
(Not Manufactured locally) : 10%
- Machinery (not manufactured locally) Zero rate upto 200% of the
imported by engineering units for export value during the
export related production: preceding financial year.
- Import of certain machines and tools Duty free
for gems & jewelry manufacturers
exporters
- Machinery (not manufactured locally) Zero Rated
imported by Export Oriented Units.
- Raw Materials Used in Producing Zero Rated
for Export
- Cascaded Tariff with following Target Rates:
? Primary Raw Materials : 10% - 15%
? Secondary Raw Materials : 15% - 25%
? Intermediate Goods : 35%
? Finished Goods : 45%
- Assembly Kits : Duty Free (Corresponding to the
number of their exported units).
- Import of raw materials and : Duty Free (against Bank
components for manufacture Guarantee)
engineering goods meant for exports
b) GENERAL SALES TAX (GST)
- GST On Imported and Domestically: "NIL"
Manufactured Plant & Machinery
- Standard GST Rate : 12.5%
c) FISCAL
I) Corporate Tax Rates (Assessment Year 1998-99)

- Public Companies 30%
- Other Companies 35%
- Banking companies 55% (50% for Assessment
Year 1999-2000)
II) Personal Income Tax Rates
(Applicable to Assessment Year 1998-99)
0 - 100,000 5%
100,000-200,000 10%
200,000-300,000 15%
ABOVE 300,000 20%
Tax on Perquisites & Allowances
Value of Perquisites (Rupees)
0 - 100,000 3%
100,000-200,000 5%
200,000-300,000 10%
ABOVE 300,000 15%
III) Tax Holiday
- 5 years Tax Holiday for following industries set up by 30-6-2000:
- Solar Energy Technology related industries.
- Fruit Processing.
- Soft & Stuffed Toys.
- No Tax on income of software exports.
IV) Accelerated Depreciation Allowance (ADA & DA)
- Initial Accelerated Depreciation allowance @ 25% on plant and equipment.
- Depreciation Allowance (DA) @ 10% on Reducing Balance.
- Extra depreciation 50% of normal allowed for double shift & 100% trip shift.
DA @ 10% is available on industrial buildings.
- DA @ 10% (Additional) on factory or workshop building.
- DA @ 5% is available on office building of factories.
- Initial DA 25% to Labour Residential Building (Constructed upto 30-6-000).
V) Fiscal Incentives for Capital Market
- Capital gains tax Exempted upto June 2001
- Tax on Bonus Shares Exempted
- Turnover tax on trading Exempted
Stock/Shares
- Tax on Foreign Investment in
Government and Corporate
fixed Income Securities Exempted
- Income Tax on non-resident
individuals, firms and Exempted
companies, investing in
stocks
- Tax on Mutual Funds and Exempted
Distribution as Dividend
C) FACILITATION
Exchange Control
Full repatriation of capital gains, dividend, profits is allowed.

There are no restrictions for contracting foreign private loans (which do not involve any guarantee by the Government of Pakistan). Also, there is no restriction on source of foreign currency loan. Long term loans can be arranged from a bank, financial institution, parent companies of multinationals or under suppliers credit.
Transfer of Technology
There are no ceilings on payment of royalties and technical service fee

Withholding tax rates on royalties and technical service fees paid to non-residents are 30% and 15% respectively. However, Royalty under some of treaties is taxable at reduced rates.
Incorporation of Companies
Section 4(a) of the Monopolies and Restrictive trade Practices Ordinance, appears to be the main concern for the foreign investors and is seen as discouraging or restricting capital formation. For facility of ready reference the said section is reproduced below:
Circumstances constituting undue concentration of economic power. "Undue concentration of economic power shall be deemed to have been brought about, maintained or continued if:
(a) there is established, run or continued an undertaking the total value of whose assets is not less that Rs. 300 million or such other amount as the Authority may be rule prescribe and which is:
(I) not owned by a public company, or

(II) is owned by a public company in which any individual holds or controls shares carrying not less than 50% or such other percentage as the Authority may be rule prescribe, of the voting power in the undertaking."
CAPITAL MARKET
Capital market has been given following incentives:
Capital gain tax exemption upto June 30, 1998 has been extended for another three years i.e., upto 30.06.2001.

Tax on bonus shares has been completely abolished.

Tax exemption to non-resident Pakistanis and foreign investors in fixed income securities.

Minimum turnover tax on the income of companies engaged in share trading has been exempted.
All those mutual funds which would declare 90% dividend for shareholders will be exempted from income tax.
iv. UNILATERAL RELIEF
A person resident in Pakistan is entitled to a relief in tax on any income earned abroad, if such income has already been subjected to tax outside Pakistan. Proportionate relief is allowed on such income at an average rate of tax in Pakistan or abroad, whichever is lower.
v. AGREEMENTS FOR AVOIDANCE OF DOUBLE TAXATION
The Government of Pakistan has so far signed agreements to avoid double taxation with 37 countries including almost all the developed countries of the world. These agreements lay down the ceilings on tax rates applicable to different types of income arising in Pakistan. They also lay down some basic principles of taxation which cannot be modified unilaterally. The list of countries with which Pakistan has concluded tax treaties is given below:

plz pray,
Sardarzada

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God is dead! God remains dead! And we have killed him! How shall we console ourselves, the most murderous of all murderers? The holiest and the mightiest that the world has hitherto possessed, has bled to death under our knife....