(As per Board of Investment, Government of Pakistan)*
Pakistan has the most liberal investment policy in the South Asia region. New incentives and further liberalization measures include:
- Almost all economic sectors are open for foreign investors.
- Foreign equity up to 100% allowed.
- No Government permissions required only terms & conditions apply.
- Attractive incentives package including.
- 0-5% customs duty on import of machinery.
- No sales tax on import of machinery.
- No withholding tax on import of machinery.
- Remittance of capital, profits, royalty, technical & franchise fee allowed.
- Equal treatment towards local & foreign investors.
- Network of export processing zones / industrial estates.
- Import of raw material for export manufacturing zero-rated.
Legal Framework to Protect Investment
- Foreign Private Investment (Promotion & Protection) Act, 1976
- Protection of Economic Reforms Act, 1992.
Policy Framework for Establishment of Economic Zones
- Full exemption of custom duties and taxes strictly on import of capital equipment including plants, machinery & equipment.
- Corporate income tax holiday for a period of five (5) years existing initial depreciation / allowance of 50% shall be reconsidered to be enhanced to 100%.
- Federal government / agencies to provide gas, electricity and other utilities at the zero-point of the economic zones.
- Foreign nationals e.g., investors, executives, expatriate employees etc., having "FBR's Pass Booklet" are allowed duty-free import of food stuff and other consumable items equivalent to US$ 1,000 per year per person in Pakistan. However, import exceeding the above duty free limit of US$ 1,000 will be allowed on payment of normal import duties.
- Various communities of foreign investors and their employees are allowed to establish exclusive clubs with recreational facilities.
- One airport entry pass for protocol purpose will be issued to foreign and local investors / companies, provided the equity investment is at least US$ 10 million.
- ID & BOI extends a courtesy service covering reception in Pakistan, hotel bookings, accommodation, transport bookings, and assisting with the business itinerary etc., for foreign investors visiting Pakistan.
- Improvements have been made pertaining to the procedures for work visas, business visas, and opening of branch / liaison office by foreign companies.
- Industry status has been granted to Tourism, IT and Housing & Construction by the Government.
- Network of export processing zones have been developed
- Measures have been taken by the Government in areas like domestic borrowing facility to foreign controlled companies, transfer of technology, immigration procedures, labor laws, incorporation of companies etc., improvement in quality of life.
- No restriction for payment of royalty and technical fee.
- The facility for obtaining foreign private loans is available to all foreign investors, for financing the cost of imported plant and machinery required for setting up the project. These loans do not involve any guarantee by the Government of Pakistan. However, loan agreements should be registered / cleared by the State Bank of Pakistan.
- Foreign controlled manufacturing concerns will be treated at par with other local companies for obtaining financial facilities for their working capital requirements.
- Foreign controlled companies are allowed domestic borrowing to meet their working capital requirements
- The payments on account of royalties and technical fees to foreign companies are taxable @ 15%
- No compulsion for a limited company to offer shares to the public irrespective of the size of capital or total value of assets