Duty-free imports allowed for G-B via Sost

FBR issues rules with Rs4b tax exemption cap; permits, domicile condition made mandatory

ISLAMABAD:

In order to fulfil a long-standing demand of the people of Gilgit-Baltistan (G-B), the federal government has decided to allow the conditional import and clearance of hundreds of items for G-B through the Sost border without payment of duties and taxes. For each consignment, an online permit issued by the authorised authority of the Government of G-B through the Customs Computerised Clearance System will be mandatory.

However, a quota has been fixed for G-B under which the cumulative exemption limit of sales tax, income tax and federal excise duty has been set at Rs4 billion in one financial year. Once the prescribed quota is exhausted, all relevant taxes will be applicable on goods imported for use in G-B.

In this regard, the Federal Board of Revenue (FBR) has issued a draft of new rules for the clearance of goods from the Sost Customs Dry Port. The draft has been published in the official gazette for public awareness. Under the law, objections or suggestions on the draft may be submitted to the FBR within three days of its publication, which will be considered before a final decision is made.

According to the notification, the FBR, exercising powers conferred under the Customs Act, 1969, the Sales Tax Act, 1990, the Federal Excise Act, 2005, and the Income Tax Ordinance, 2001, has proposed new rules governing clearance from the Sost Customs Dry Port.

Under the draft rules, the regulations will apply only to specific goods imported through the Sost Customs Dry Port and will come into force immediately. Only goods imported through the Silk Route Dry Port, Sost, and classified under specified Pakistan Customs Tariff Codes mentioned in the notification will be eligible for the facility.

The rules state that sales tax, income tax and federal excise duty will not be levied on such imports, provided an online permit is issued in the Customs Computerised Clearance System by the authorised G-B authority. The importing firm or company must also be wholly owned by individuals holding a domicile of G-B.

The cumulative exemption limit of Rs4 billion will be calculated through the customs system on a first-come, first-served basis. Once the quota is completed, all applicable taxes will be imposed on imports meant for use in G-B.

The rules emphasise that the G-B government will ensure that goods imported under this facility are used strictly within the region. In case customs operations are affected due to protests, sit-ins or road blockades, the Collector of Customs G-B, after consultation, may temporarily suspend the exemption.

If misdeclaration is detected or goods are moved outside the region, the Collector will be authorised to withdraw the exemption, while enforcement authorities will ensure compliance. Relevant import laws will continue to apply.