On 2 December 2020, the Ministry of Law and Justice of Pakistan has issued a copy of the Special Technology Zones Authority Ordinance 2020, Gazette on 3 December 2020 and applies with immediate effect.
The Ordinance introduces supporting measures to technology development in Pakistan, including measures for the establishment of the Special Technology Zones Authority and related tax incentives for approved zone developers and zone enterprises. The incentives are as follows:
Incentives for zone developers:
- Exemption from all taxes on income accruable in relation to the development and operations of the zones for a period of 10 years, starting from the date of signing of the development agreement;
- Exemption from all custom duties and taxes for a period of 10 years from the date of signing of the development agreement on capital goods including but not limited to materials, plant, machinery, hardware, equipment and software imported into Pakistan for consumption within zones by the Authority and zone developers; and
- Exemption from general sales tax (GST) on goods and services on import of plant, machinery, equipment and raw-materials for consumption of these items within zones by the Authority and zone developers.
Incentives for zone enterprises:
- exemption from all income taxes (withholding tax, presumptive tax) for a period of 10 years from the date of issuance of license by the Authority;
- exemption from all custom duties and taxes for a period of 10 years from the date of issuance of license by the Authority on capital goods including but not limited to materials, plant, machinery, hardware, equipment and software imported into Pakistan for consumption within zones by the Authority and zone enterprises;
- exemption from property tax for 10 years from the date of issuance of license by the Authority;
- exemption from G.S.T on goods and services on import of plant, machinery, equipment and raw-materials for consumption of these items within zones by the Authority as well as zone enterprises; and
- tax exemption on dividend-income and long-term capital gains from investments in a venture capital (VC) undertaking for a period of 10 years from the date of issuance of license by the Authority.
