ISLAMABAD: Pakistan has granted five-year tax exemption on income derived from cinema operations in order to promote local film industry.
The tax exemption has been granted under Income Tax Ordinance, 2001 by amendment made through Finance Act, 2022.
The Federal Board of Revenue (FBR), the apex tax collecting agency of Pakistan, issued Income Tax Circular No. 15 of 2022/2023 to explain important amendments introduced through the Finance Act, 2022 to the Income Tax Ordinance, 2001.
The FBR said that in order to promote local film industry, following new measures have been introduced:
(i) Five years tax exemption has been granted by inserting clause (151) in Part I of Second Schedule to the Income Tax Ordinance 2001 to a person who derives any income from cinema operations, starting from the commencement of cinema operations.
(ii) Through insertion of clause (153) in Part I of Second Schedule to the Ordinance, exemption has been granted to profit and gains derived by a resident producer or a resident production house from production of feature films during the period from July 01, 2022 to June 30, 2027.
(iii) Similarly, exclusion from provisions of section 148 of the Income Tax Ordinance, 2001 has been provided through insertion of Clause (12P) in Part IV of Second Schedule on import of machinery and equipment as listed in serial no. 32 of Part-I of Fifth Schedule to the Customs Act, 1969 subject to the conditions and limitations specified therein.
(iv) Moreover, through insertion of clause (43H) in Part IV of Second Schedule, exclusion from the provisions of clause (b) of sub-section (1) of section 153 has been provided to an exhibitor or a distributor of a feature film, as payer, on payment made to a distributor, producer or importer of feature film.