Beijing airs concerns over delay in tax break

Seeks exemption from duties, taxes on goods donated to G-B Police

ISLAMABAD:

The Chinese government has voiced concerns over delay of more than one year in granting one-off tax exemption to the equipment and furniture donated to Gilgit-Baltistan (G-B) Police.

The matter was taken up in a recent meeting of the Economic Coordination Committee (ECC) where it was pointed out that Beijing was concerned about the delay in tax break as the issue had been pending for the past 14 months.

The Ministry of Kashmir Affairs and Gilgit-Baltistan briefed the economic decision-making body that the Immigration Department of China had donated office equipment and furniture to the G-B Police on January 21, 2022. Owing to Covid-related restrictions, the goods could not be cleared from the Customs Port Sost, Hunza.

Now, for the clearance from Customs, the Department of Home and Prisons, Civil Secretariat, Government of G-B has requested for recommendations of the federal government for granting one-time exemption from all types of duties and taxes under the Pakistan Customs Tariff.

The ECC was apprised of the relevant provision of the Pakistan Customs Tariff provided in the Pakistan Customs Act 1969, which stipulated “goods received as gift or donation from a foreign government or organisation by the federal or provincial government or any public sector organisation subject to recommendation of the federal government and concurrence from the Federal Board of Revenue (FBR)”. In pursuance of the above provision, the FBR had concurred to the proposal subject to recommendations of the federal cabinet, said the Ministry of Kashmir Affairs and G-B.

It requested the ECC to grant one-off exemption from all types of duties and taxes on the import of office equipment and furniture donated by the Immigration Department of China. The ECC discussed the case threadbare and observed that details of taxes to be imposed on the office equipment and furniture had not been provided in the ministry’s summary.

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It was further noted that as a matter of principle, there should be no tax relief for such type of imports by government departments as it would create distortion in the tax regime. Also, it could encourage private sector organisations to demand the same type of treatment from the government. Therefore, the policy for such tax exemptions should be reviewed.

It was suggested that the issue should be resolved without further delay. The ECC agreed on the proposed tax exemption with the directive to the Ministry of Kashmir Affairs to share with the Finance Division details of duties to be calculated by the FBR.

The ECC considered the summary submitted by the Ministry of Kashmir Affairs titled “Exemption from all types of taxes on import of office equipment and furniture donated by the Immigration Department of China to G-B Police through Land Route” and approved the proposal.

It directed the ministry to submit to the ECC chairperson the amount of duties and taxes to be calculated by the FBR.

Published in The Express Tribune, November 26^th, 2023.

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