Pakistan: Tax incentives to encourage industrial investment

Ordinance includes tax amnesty when investments are made from previously undeclared assets

Ordinance includes tax amnesty when investments are made from previously undeclared assets

The “Income Tax (Amendment) Ordinance, 2022” includes tax amnesty when investments are made from previously undeclared assets (similar to a tax amnesty program).

  • A tax incentive regime is intended to foster industrial activity by offering tax incentives to Pakistani businesses that make investment in “sick” industrial units as well as tax incentives for businesses establishing activities in identified industries (except for industrial sectors related to sugar, carbonated beverages, cigarettes manufacturing, explosives and arms manufacturing).
  • To be eligible, the investment must satisfy a Rs. 50 million threshold under a “no questions asked” basis, from assets not previously declared up to tax year 2021; the incentive is available when tax at a rate of 5% is paid, up through 30 September 2022.
  • Existing companies also may acquire “sick” units and have their losses adjusted against their own income.
  • A credit equal to 100% of the investment may be available to both Pakistani and foreign investors when the minimum investment is at least Rs. 50 million.

The measures have been approved by the Cabinet, and are enacted when signed by the president.

Read a March 2022 report [PDF 881 KB] prepared by the KPMG member firm in Pakistan

 

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