ECC allows tax breaks for two CPEC projects

Approves rebate of $30/ton on export of surplus wheat


Shahbaz Rana July 27, 2016
Approves rebate of $30/ton on export of surplus wheat. PHOTO: AFP

ISLAMABAD: The government on Tuesday introduced extensive long-term tax concessions for two Chinese companies operating in the country in a move to rationalise the cost of projects under the China-Pakistan Economic Corridor Belt and Road programme.

The Economic Coordination Committee (ECC) of the cabinet which met here with Finance Minister Ishaq Dar in the chair approved tax exemptions to the tune of Rs33 billion for two Chinese firms – the China State Construction Company Engineering Company (CSCEC) and the China Communication Construction Company (CCCC) – that are working on two infrastructure projects.

Pakistan waives off bidding condition for CPEC projects

The exemptions have been given under the Framework Agreement the two countries had signed when Chinese President Xi Jinping visited Pakistan last year. Finance Minister Ishaq Dar had given anticipatory approval to waiving duties and taxes in his capacity as chairman of the ECC.



The ECC accorded approval to write off Rs29.23 billion in favour of CSCEC that has been constructing Sukkur-Multan section of the Lahore-Karachi motorway. An amount of Rs19.1 billion has been written off in lieu of customs duty for importing equipment, materials, plants, machinery, appliances and accessories used in the project. Another Rs10.2 billion has been waived on account of withholding taxes.

In December last year, CSCEC had offered a bid of Rs406.3 billion for the Sukkur-Multan section of the Lahore-Karachi motorway, which was lowered to Rs294.4 billion as a result of negotiations between the government and the contractors. The Executive Committee of National Economic Council (Ecnec) approved the total cost of the project at Rs298 billion, exclusive of taxes and duties.

The ECC also approved duty/tax write-off to the tune of Rs3.7 billion in favour of CCCC. The company has been constructing the Thakot-Havelian section of the Karakoram Highway under the CPEC.

The company had originally placed Rs192 billion bid for the project, which the government brought down to Rs134 billion, exclusive of taxes and duties. An amount of Rs2 billion has been waived on account of import duties and withholding taxes amounting to Rs1.7 billion.

Govt sees 2016 as take-off year for CPEC project

The committee also allowed additional rebate of $30 per ton on the export of surplus wheat or flour taking the total per ton subsidy to $120. Taxpayers have already been paying a subsidy of $90 per ton on wheat export; however, exporters could not win export orders due to low international prices.

The fresh subsidy has been approved after the Pakistan Agriculture Research Institute conducted a study that showed that wheat prices in the international market were $120 per ton lower than the prices in domestic markets. The ECC had allowed Punjab and Sindh to export 800,000 metric tons of wheat.

The ECC did not approve a summary for the import of gram pulse and asked the Ministry of Food and Agriculture to first study market dynamics. The pulse prices are skyrocketing due to the shortage of the commodity.

It also refused to take up a summary that the Ministry of National Health Services, Regulation and Coordination moved to place a ban on the import of Sheesha tobacco. The ECC referred the matter to the federal cabinet.

The Supreme Court had imposed a ban on the import of Sheesha in the country and ordered the federal government to submit a report in this regard.

The ECC allowed the Bank Alfalah Limited to remit $27.2 million to the United Arab Emirates for setting up a wholesale branch. The Abu Dhabi Group is the main shareholder of the Bank Alfalah, which is Pakistan’s sixth largest bank.

Published in The Express Tribune, July 27th, 2016.

COMMENTS (2)

Zara Abbas | 7 years ago | Reply @Hari Om you are the best analysis person I have seen.
Hari Om | 7 years ago | Reply CPEC has provided “Iron Brother” China a great opportunity to leverage Pakistan’s “Deeper than Indian Ocean” dependence thus enabling Chinese companies to extract “Higher than Himalayas” tax concessions to make “Sweeter than Honey” profits in Pakistan. Denial of Tax Revenue to Pakistani’s and provision of Tax Concessions to Chinese companies truly makes CPEC expand to read as “Conning Pakistani’s to Enrich China”.
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