Taxes, duties on green power technologies likely to be eliminated

Federal government decides to eliminate almost all taxes and duties on renewable power technologies.

ISLAMABAD: The federal government has decided, in principle, to eliminate almost all taxes and import duties on renewable power technologies, including solar photovoltaic (PV) panels and instruments. A summary has been sent to the Economic Coordination Committee (ECC) which will review and decide whether to approve it.

According to sources, the ECC has forwarded this summary to the Federal Board of Revenue (FBR) and the FBR is expected to allow the removal of all taxes and import duties on renewable power technologies except for a five per cent customs duty on solar PV panels. The five per cent customs duty is not due to be removed in order to promote the local renewable energy technology industry.

The FBR had firmly supported the stance to remove all types of taxes imposed on the import of renewable energy conservation equipment. The board is currently reviewing the summary and will send its recommendations to the ECC in a few days.

According to a copy of the summary, renewable power technologies, including solar PV panels, modules and instruments are subject to five per cent customs duty, 16 per cent sales tax, two per cent commercial sales tax, one per cent regulatory duty and four per cent income tax.

The document cited the energy crisis in the country and the increasing strain on conventional sources of power as reasons for this suggested measure. It said that renewable energy is an important source of environment-friendly power and will assist in curbing the power shortage in the country. The taxes and duties on the import of renewable power technologies are the main reason for the failure of these technologies and for investor reluctance to enter the renewable technology market, the document noted.

The FBR, the ministry of commerce, the ministry of environment, the Alternate Energy Development Board, the Engineering Development Board and the Renewable Energy Association of Pakistan had all earlier agreed on the elimination of taxes and duties on renewable technologies.

It was also agreed that to ensure quality of the solar PV panels and modules, the equipment and systems may be tested and certified by the certification authorities concerned.

Published in The Express Tribune, October 21^st, 2010.