To inject fresh impetus into the planned $ 4.5 billion oil refinery plant by a Chinese company in Gwadar as well as more than $ 10 billion oil refinery plant by Saudi Arab and UAE in Hub, Balochistan, the Pakistani government has finalised a draft of the oil refinery policy 2023 that envisages several tax exemptions and incentives.
According to a report published by Gwadar Pro on Sunday, the refining policy comprised of two components with one related to existing local refineries and the other about the investment for the new refineries in the country.
The policy proposes an exemption from customs duty, surcharges, withholding taxes, general sales tax, any other ad valorem tax, or any other levies/ duties on the import of equipment to be installed or materials to be used in the refinery without any precondition of certification by the Engineering Development Board.
The federal government will facilitate the grant of similar exemption from the provincial and local taxes, the Policy revealed.
The exemption will be available to foreign contractors or sub-contractors from the provincial and federal taxes concerning the execution of services for construction, operations, and engineering performed in Pakistan.
Refineries will be exempt from the withholding tax requirements under the Income Tax Ordinance 2001 on payments to be made to non-resident persons (including the contractor or an associate of the contractor) on account of the purchase of machinery/equipment to be installed in the project.
According to the draft policy, in case the pricing regime is deregulated, during the period from January 1, 2023 to December 31, 2028, the refineries will be allowed to retain the prevalent customs duty in the ex-refinery price.
