The government of Pakistan allowed import of up to 25 motor vehicles without duty and tax to investors making substantial contributions to export processing zones (EPZ).
The Customs Rules, 2001, have been amended to allow duty-free import of motor vehicles to investors committing $125 million or more to projects within these designated zones.
Under the revised regulations, the government has outlined a tiered system, specifying the number of motor vehicles an investor can import without payment of customs duty and other taxes based on the scale of their investment. The entitlements are as follows:
1. Investment of US$ 10.00 million or more, up to US $ 25 million: Three motor vehicles
2. Investment of more than US $ 25 million but less than US $50 million: Five motor vehicles
3. Investment equal to or more than US $50 million but less than US $75 million: 10 motor vehicles
4. Investment equal to or more than US $75 million but less than US $100 million: 15 motor vehicles
5. Investment equal to or more than US $100 million but less than US $125 million: 20 motor vehicles
6. Investment equal to or more than US$ 125 million: 25 motor vehicles
It’s important to note that the exemption is capped at one motor car of up to 1600 c.c within the allowed number of vehicles. Additionally, the privilege is contingent on the verification of the investment amount and the successful completion of the project within a stipulated three-year timeframe, as overseen by the Export Processing Zone Authority (EPZA).
In a bid to encourage employment generation, units employing up to 25 workers are eligible to import or purchase one coaster, while units with more than 25 workers can import or purchase a bus with up to 50 seats.
Moreover, units with an annual turnover of US$ 5 million or more are entitled to import or purchase one cargo vehicle or truck, aligning the benefits with the scale of business operations.
Government’s Focus on Economic Stimulus:
This strategic move by the government reflects a targeted effort to incentivize substantial investments in export processing zones. By offering duty-free import privileges on motor vehicles, the government aims to attract investors to contribute significantly to the economic development of the country.
The tiered approach ensures that the magnitude of investment corresponds to the scale of benefits provided, offering a nuanced incentive structure for potential investors. Additionally, the provision for employment-based eligibility and turnover criteria aligns with the broader goal of stimulating economic activities and creating job opportunities.
Compliance and Oversight:
To ensure the integrity of the program, the exemption is subject to rigorous verification processes by the EPZA. Investors must meet specified criteria, and the successful completion of the project within the designated timeframe is crucial for retaining the duty-free import privileges.
This initiative is expected to draw attention from both local and foreign investors, as it not only provides tangible economic benefits but also aligns with the broader strategy of facilitating business growth and fostering a conducive investment environment within the export processing zones.
Conclusion:
The government’s decision to grant duty-free import of motor vehicles to high-investment export processing zone investors signifies a bold step toward encouraging significant contributions to economic development. By tailoring incentives to the scale of investment and business operations, the government aims to attract substantial investments that will contribute to job creation and overall economic growth. This move is poised to enhance the appeal of export processing zones, positioning Pakistan as an attractive destination for strategic investments.
