In the name of Gwadar Port: 40-year tax exemption to companies rejected

ISLAMABAD: While sternly opposing government’s move to insert routine legislations though Finance Bill 2020-21 in a bid to bypass the Upper House, the Senate Standing Committee on Finance has outrightly rejected Gwadar Port’s 40 years tax exemption on specific names of companies, their contractors and sub-contractors.

All senators belonging to irrespective of political divide were of view that such tax exemptions were misused. However, Senator Sherry Rehman pointed out that these agreements were already done with China.

For taking final decision, the Senate panel summoned top guns of Ministry of Maritime on Wednesday (today) for finalising its ultimate recommendation for budget 2020-21. “It’s simply ‘vulgar’ to grant companies, their contractors and sub-contractors specific tax exemptions on name of Gwadar port. There was only Ziaul Haq’s name that became part of the legislation so it indicated some powerful were behind this move. I request government that please don’t embarrass legislators by bringing such proposal” Senator Mussdiq Malik said while participation into debate that kick-started here to finalise recommendation on Finance Bill 2020-21 during the Senate panel meeting.

The Senate Standing Committee on Finance and Revenues held its meeting under Chairmanship of Senator Farooq H Naek here at the Parliament House on Tuesday.

Senator Farooq H Naek said that only those clauses could become part of Finance Bill that were related to imposition, alteration and remission of taxes but the regulatory or administrative clauses could not be made part of the Finance Bill. He said that the penalty or fines could not be introduced through Finance Bill.

After heated debate, the Senate Panel chairman decided to go through the Finance Bill clause by clause and then the committee would take final decision about those clauses that would not be acceptable to them as part of the Finance Bill 2020-21. FBR’s Member Customs (Policy) Javed Ghani tabled definition of smuggling and sought help from Border Military Police (BMP) before the committee as first clauses and majority of senators belonging to opposition benches were of the view that these clauses should not be made part of the Finance Bill 2020-21.

During two hours meeting, the Senate panel accepted one clause as part of the Finance Bill that was related to minim duties. The FBR has proposed under clause 3 (5) of Customs Act 1969 that where the value of imported good is equal to or less than Rs5000, no duties and taxes shall be demanded subject to conditions and restrictions as may be prescribed by the Board under the rules. Senator Ateeq Sheikh from MQM Pakistan recommended jacking up duty free minimum import value from Rs5000 to Rs10,000.

The FBR’s Member Customs Javed Ghani then went to second last page of the changes proposed into Customs Act through Finance Bill 2020-21 and stated that this bill proposed equipment and materials (plant, machinery, equipment, appliances, and accessories) imported by the concession holder, its operating companies “including Gwadar International Terminals Limited and Gwadar Marine Services Limited and their” contractors and sub-contractors exclusively for construction and operation of the terminals and Free Zone Area for a period of 40 years.

It was also told by PM to the Senate panel in writing that a summary for the cabinet was moved by the Ministry of Maritime Affairs recommending changes relating to laws pertaining to Gwadar. Accordingly, the Tax Laws Amendment Ordinance 2019 was promulgated on 6-10-2019. As the ordinance was not yet approved by the National Assembly, therefore the changes have been incorporated in the finance bill.