To keep Pakistan competitive in international market and make the investments viable, it is decided:-
Manufacturing sector be prioritized in four categories:

(A) Value Added or Export Industries
(B) Hi-Tech
(C) Priority Industries
(D) Agro-based Industries
The units which export 80% or more of their production in any one year or have minimum value-addition of 40% of production value (which may be specified from time to time), will be treated as Value-Added or Export Industry respectively. The indicative list for such industries is shown in Category (A). Any industry other than indicated in the list for Category (A) shall also be entitled for the same incentives provided it fulfills the criteria laid down for this category.
Comprehensive lists for these categories have been formulated. While identifying the industries, parameters have been the level of technology involved, export potential, domestic market requirements, value addition, processing of local raw materials and forward/backward linkages to other economic sectors. The lists are placed at Annex-IV, V,VI & VII. However, these lists can be reviewed by the Cabinet Committee on Investment (CCOI) as and when deemed necessary. List of service deregulated in the Telecommunication Sector is at Annexure-III.
Zero rated tariff will be applicable on import of plant, machinery & equipment (which is not manufactured locally) for the industries falling under (A) & (B) categories, i.e. Value Added, Export and Hi-tech Industries. The facility will be available only to plant, machinery & equipment used for manufacturing in that industry - while the import of raw materials, sub-components and components, etc., will be governed by the present cascaded tariff regime and subject to the provisions of Deletion Policy.
The imported plant, machinery & equipment (which is not manufactured locally) for the industries falling under Categories (C) & (D), will have the facility of deferment of import duties as half of the payable duties shall be paid at the time of import and half shall be deferred and the deferred amount will be paid in lump sum after a period of three years.
(I) FISCAL (Tax Relief)
Fist Year Allowance (FYA)
For new investments, First Year Allowance (FYA) on capital expenditure/ investment, will be granted. The capital expenditure/investment will include the cost of plant, machinery & equipment. However, FYA will be allowed in case tax exemption/holiday is not available. FYA can be utilized to set-off against the of statutory income in the year of assessment. Any un-utilized allowance can be carried forward to subsequent years until the whole amount is used up.
FYA will be available at following rates:-
Category (A): @ 90% of the Capital expenditure investment.
Category (B): @ 90% of the Capital expenditure investment.
Category (C): @ 75% of the Capital expenditure investment.
Category (D): @ 75% of the Capital expenditure investment.
Other Industries:
Presently Accelerated Depreciation Allowance (ADA) is available @ 25% in first year and 10% normal DA, i.e., initial DA of 35% in first year. However, Extra Shift Allowance for 3 shifts @ 10% is also available. It is decided that for other industries (not falling under above categories) DA in first year be enhanced to 50% from the present level of 35 - 45%.
(II) Re-investment Allowance (RA)
To encourage the investors to re-invest their earnings by expanding the existing manufacturing facilities and improving the technology or diversifying the product line, Re-investment Allowance (RA) @ 50% of capital expenditure/investment will be allowed in case of Balancing, Modernization & Replacement (BMR), and expansion.
(III) Industrial Building Depreciation Allowance
To encourage the establishment of Small and Medium Industries, the companies who would construct Industrial sheds/structures and sell/lease to SMIs will be granted an enhanced DA @ 30% (in first year) of the cost which has been incurred on the development of these sheds/structures.
3. Protection to Domestic Manufacturing
The Concept to keep the domestic manufacturing competitive will continue to be followed in adjusting tariff structure. The duty on finished products will attract higher rate than the imported raw materials/inputs. Therefore, incidence of duties and taxes on locally produced goods would be less than the incidence of duties and taxes on finished imported goods. A reasonable tariff protection will be available to domestic manufacturing depending upon value addition.
4. Protection of Foreign Investment
The economic policies, and the existing legal cover for foreign and Pakistani investment will be extended to new areas/sectors. The benefits and incentives for investment, provided by the Government shall continue in force and will not be reduced or altered to the disadvantage of investors. According Foreign Private Investment (Promotion and Protection) Act, 1976 and the Protection of Economic Reforms Act, 1992 shall be amended.
5. Holding Companies
To facilitate the formation of holding companies, it is decided that:-
? Preparation of consolidated financial statement be made mandatory for listed companies initially.

? Section 208 of the Company’s ordinance 1984 will be amended whereby exemptions presently available to wholly owned subsidiaries be extended to subsidiaries, whether or not whollyowned. As section 208 relates to investment both in respect of equities and loans, the suggested amendment will be restricted to equity investments only.

? The holding company should be listed, while the subsidiary companies should be delisted, and shareholders be given shares of the holding company.

? Following amendments in tax laws will be made to facilitate the functioning of holding companies:-
a) Provision to offset tax losses incurred by other subsidiaries.
b) Tax exemption on subsidiaries’ dividends to avoid double taxation.
c) Adjustment of taxes paid by subsidiaries against tax liability of the holding company.
6. OTHERS
? The source of investment made under this Policy Package will not be questioned by the Tax Authorities.

? There will be no ceiling of total value of assets of a Company for retaining 100% ownership by investors.

? Petroleum, Mineral Development, Tourism, Private Power & Transmission, Insurance and Health Policies will become part of the Package on finalization by the concerned Ministries and approval of the competent Authority/Forum


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....