ISLAMABAD: Chinese mobile manufacturing companies' upcoming production plants of next generation smartphones will qualify for reduced income tax rates, Finance Minister Ishaq Dar said on Friday.
The reduced rates were announced in the new budget as part of incentives to lure foreign investors.
Foreign Direct Investment (FDI) in manufacturing, construction and housing will be subject to 20% corporate income tax against the present corporate income tax rate of 33%.
Finance Minister Senator Ishaq Dar chaired a meeting with a group of Chinese investors at the finance ministry. The group expressed its commitment to expedite the set up of the smartphone manufacturing industry in Pakistan.
Pakistan recently auctioned next-generation (3G and 4G) services. During the Pakistan Telecommunication Authority (PTA) auction, Chinese Mobile Company, Zong, was the company that won the license for 4G services.
The auction of next-generation services contributed significantly to the country's foreign exchange reserves, earning Pakistan over one billion dollars from the auction of these licenses. Two licenses of the next-generation technology are still unsold.
Assisted by Minister of State for Science and Technology and other officials of the ministry, Dar briefed the Chinese investors on the latest economic indicators and performance of the economy during the last one year. He also discussed the proposed budget which provides special incentives for foreign investment in Pakistan.
Dar said FDI in the IT sector will enjoy a special corporate tax rate for the next five years if they complete their projects in three years time - till 30th June, 2017.
The finance minister assured the group of investors that their concrete proposal, prepared in consultation with the ministry of IT and the Board of Investment (BOI), will be considered seriously to develop local mobile manufacturing units in Pakistan.
He further assured the Chinese investors group that the government will provide incentives for local manufacturing of smartphones and IT-related solutions during the next three years. Dar also said that Pakistan has an educated and skilled young labor force, and it can be used as an export base to the whole region.
Lou Peide, Secretary General of Chinese Mobile Companies Association and head of the delegation, said that the group comprises of famous Chinese companies in the smartphone manufacturing sector.
He said that the delegation is in Pakistan to share the Chinese experience, as Pakistan’s domestic market presents a huge opportunity for manufacturing smartphones that are capable of 3G and 4G technology.
Piede mentioned that with a population of nearly 200 million and a high growth rate of the mobile industry, there is a huge requirement for local manufacturing units in the country.
He also said that Chinese companies own almost 80% of the global market and produce smartphones that cost anywhere between $22 and $600.
We have introduced multiple operating system and solutions to security requirements, Piede said.
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