Senate committee discusses tax exemption to FATA/PATA and Malakand Division

Islamabad Politics Report/Moazzam Raza Tabassam: The Senate Standing Committee on Finance, Revenue and Economic Affairs Friday recommended that the notification regarding tax exemption or commercial enterprises in FATA/PATA and Malakand Division should not be issued by the FBR till the next meeting of the Committee.

Chaired by Senator Farooq H. Naek, the meeting was attended by Senator Mian Muhammad Ateeq Shaikh, Senator Mohsin Aziz, Senator Dilawar Khan, Senator Khanzada Khan, Senator Anwar ul Haq Kakar and senior officers from the Federal Board of Revenue (FBR), Ministry of Finance and Ministry of Law and Justice. Senator Fida Muhammad was specially invited for his valuable input regarding issues that came under discussion with regards to the people of FATA/PATA and Malakand Division.

The meeting commenced with consideration of a point of public importance raised by Senator Mirza Muhammad Afridi regarding utilization of Zakat Funds in the education and health sectors and details that revealed disbursement of those funds to FATA. Chairman Committee Senator Naek asserted that the Committee be briefed about the collection and distributions modes for the Central Zakat Fund. He also questioned the Minister about the department where this fund is deposited. Additional Secretary, Ministry of Finance clarified that this subject did not fall under his ambit and that the Ministry of Religious Affairs was responsible for this fund.

After deliberation, Chairman Committee, Senator Naek concluded that the Ministry of Religious Affairs be called in the next meeting. 

While further discussing modalities of the implementation of Tax Relief Regimes announced by the Government as promised during the passage of FATA, PATA and Malakand region merger Bill/25th Constitutional Amendment, a brief submitted by the FBR regarding the said exemptions, was reviewed.

Members of the Committee once again reiterated the importance of facilitating this conflict ridden region by extending tax exemptions to commercial enterprises in FATA/PATA and Malakand Division for a minimum of five years. They stressed that all exemptions given in Article 247 i.e. prior to the 25th Amendment of the Constitution be implemented to the fullest.

While discussing the issue of registration of non custom-paid vehicles in FATA/PATA and Malakand Division, Senator Mohsin Aziz stressed the need for ensuring that people in the region are made aware of this through an extensive advertising campaign.  He also stressed the need to extend the deadline for a minimum of 30 days.  Chairman Committee, Senator Naek recommended that the deadline for non custom-paid Vehicles be extended for a period of 2 months. He further stressed the need of an extensive publicity campaign so that residents of that region could be made aware of the process.     

While discussing the issue of Federal Excise Duty (FED), previously Central Excise Duty (CED), being levied at the rate of 16 per cent members of the Committee were livid at an increase of one per cent; since earlier it was 15%. Dr. Muhammad Iqbal, Member IR Policy FBR, clarified that concessions to the people of FATA/PATA and Malakand Division were still in place as the tax levied was 16 per cent as opposed to 21 per cent suggested by the Senate of Pakistan. 

Senator Mohsin Aziz and Senator Anwar ul Haq Kakar were in favour of concessions to industries and commercial enterprises in the area. However, it was suggested that incentives be rationalized by categorizing commercial and industrial enterprises.  Senator Aziz, asserted the need of negative/positive list to ensure maximum concessions.  Senator Haq suggested that a sub-committee be formed to oversee these issues.

Dr. Iqbal suggested that before giving verdict on the issue, a visit to the areas in question was important to get an idea of ground realities. 

The Committee recommended by majority that exemptions given to the FATA and PATA including Malakand Division prior to the 25th Constitutional Amendment may be restored for a period of five years with regard to the existing /operational industries only. However, for the applicability of such exemptions to the industries to be set-up or established in future, further deliberations should be made after a visit of the Committee to the area and after being obtaining views of all the stakeholders.

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