In exercise of the powers conferred by section 19 of the custom act ,1969 (IV of 1969),and section 7 of the Sales Tax Act,1951 (III of 1951), the Federal Government, subject to such conditions, limitations and restrictions as the Central Board of Revenue may impose from time to time, is pleased to exempt from the whole of customs-duties and sales tax leviable on all the goods imported into and exported from the Export Processing Zones established under the Export Processing Zones Authority Ordinance, 1980 (IV of 1980).
Source *(S.R.O. 881(I)/80, dated 23-08-1980)
In exercise of the powers conferred by clause (c) of section 21 of the Customs Act, 1969 (IV of 1969), and sub-section (2A) of section 27 of the Sales Tax Act, 1951 (III of 1951), the Central Board of Revenue is pleased to authorize the repayment of customs-duties and sales tax paid on the raw materials used in the manufacture of goods admitted into the Export Processing Zones established under the Export Processing Zones Authority Ordinance, 1980 (IV of 1980), at such rates and subject to such conditions as are applicable to the goods exported outside Pakistan.
Source: *(S.R.O. 882(I)/80, dated 23-08-1980)
(http://epza.gov.pk/wp-content/uploads/2017/01/sr os.pdf)
Freedom from national import regulations*
The investors are allowed to imports irrespective of their imports to meet their requirements subject to the condition that order in in respect of which are placed directly by the administrative organizations.
In exercise of the powers conferred by section 25 of the Export Processing Zones Authority Ordinance, 1980 (IV of 1980), the Federal Government is pleased to exempt Karachi Export Processing Zone from the provisions of the Registration (Imports and Exports) Order, 1952, 1 [the import Trade Control Order, 1973], the Import Policy Order issued from time to time and Schedules I to IV and VI annexed to the Ministry of Commerce’s Notification NO. SRO. 685(1)/79, dated the 31st July, 1979, except in so far as they relate to supplies from Karachi Export Processing Zone to the tariff areas of Pakistan. (No.5(1)/80-P.1)
Source: *(S.R.O. 582(1)/80, dated 02-06-1980)
(http://epza.gov.pk/wp-content/uploads/2017/01/sros.pdf)
Exchange control regulations of Pakistan not applicable*
Foreign Exchange Policy and its operations in Pakistan are formulated and regulated in accordance with the provisions of the Foreign Exchange Regulation Act, 1947.
In exercise of the powers conferred by section 25 of the Export Processing Zones Authority Ordinance, 1980 (IV of 1980), the Federal Government is pleased to exempt the Export Processing Zones from all the provisions of the State Bank of Pakistan Act, 1956 (XXXIII of 1956), and the Banking Companies Ordinance, 1962 (LVII of 1962), except sections 7, 25A, 32, 40, 41 and 42 thereof.
Source: *(S.R.O. 1248(1)/48, dated 23-11-1983)
http://epza.gov.pk/wp-content/uploads/2017/01/sros.pdf
In exercise of the powers conferred by section 25 of the Export Processing Zones Authority Ordinance, 1980 (IV of 1980), the Federal Government is pleased to exempt the Export Processing Zones established under the said Ordinance from the provisions of the Foreign Exchange Regulations Act, 1947 (VII of 1947). HASINUDDIN AQUIL Deputy Secretary
Source: *(S.R.O. 1332(1)/81, dated 13-12-1981)
http://epza.gov.pk/wp-content/uploads/2017/01/sros.pdf
In exercise of the powers conferred by sub-section (1) of section 12 of the Foreign Exchange Regulation Act, 1947(VII of 1947), the Federal Government is pleased to direct that the following further amendment shall be made in its Notification No. 1(7)-ECS/48, dated the 1 st July,1948, namely:- In the aforesaid Notification, in the proviso,- (a) in item 4, for the full-stop at the end a semi-colon and word “ ; and ” shall be substituted ; and (b) after item 4 amended as aforesaid, the following mew item shall be added namely :- “5. Goods processed or manufactured or processed and manufactured in and exported from Export Processing Zones established under the Export Processing Zones Authority Ordinance, 1980 (IV of 1980).”
Source: *(S.R.O. 535(I)/80, dated 25-05-1980)
Foreign Exchange Regulation Act, 1947 and Notifications issued there under. Foreign Exchange Policy and its operations in Pakistan are formulated and regulated in accordance with the provisions of the Foreign Exchange Regulation Act, 1947. The object of this Act is to regulate, in the economic and financial interest of Pakistan, certain payments, dealings in foreign exchange, securities, import/export of currency and bullion. Under the Act, the basic regulations are issued by the Government of Pakistan and the State Bank in the form of Notifications which are published in the official Gazette. The Act, as amended up-to date, is reproduced at the end of the Manual as Appendix I. Notifications issued by the Government of Pakistan under the Act, except those issued in terms of sub-section (2) of Section 19, sub-section (2) of Section 23 and Section 23-B are reproduced as Appendix II and those issued by the State Bank are reproduced as Appendix III.
In exercise of the powers conferred by sub-section (1) of section 12 of the Foreign Exchange Regulation Act, 1947(VII of 1947), the Federal Government is pleased to direct that the following further amendment shall be made in its Notification No. 1(7)-ECS/48, dated the 1 st July,1948, namely:- In the aforesaid Notification, in the proviso,- (a) in item 4, for the full-stop at the end a semi-colon and word “ ; and ” shall be substituted ; and (b) after item 4 amended as aforesaid, the following mew item shall be added namely :- “5. Goods processed or manufactured or processed and manufactured in and exported from Export Processing Zones established under the Export Processing Zones Authority Ordinance, 1980 (IV of 1980).”
Source: *(S.R.O. 535(I)/80, dated 25-05-1980)
Foreign Exchange Regulation Act, 1947 and Notifications issued there under. Foreign Exchange Policy and its operations in Pakistan are formulated and regulated in accordance with the provisions of the Foreign Exchange Regulation Act, 1947. The object of this Act is to regulate, in the economic and financial interest of Pakistan, certain payments, dealings in foreign exchange, securities, import/export of currency and bullion. Under the Act, the basic regulations are issued by the Government of Pakistan and the State Bank in the form of Notifications which are published in the official Gazette. The Act, as amended up-to date, is reproduced at the end of the Manual as Appendix I. Notifications issued by the Government of Pakistan under the Act, except those issued in terms of sub-section (2) of Section 19, sub-section (2) of Section 23 and Section 23-B are reproduced as Appendix II and those issued by the State Bank are reproduced as Appendix III.
Source : *(Foreign Exchange Regulation Act 1947) http://www.fia.gov.pk/en/law/Offences/11.pdf
Specified rate of income tax
In Export Processing Zones, at the time of export of goods by an industrial undertaking EPZA will collect tax at the specified rate
The Export Processing Zone Authority established under the Export Processing Zone Authority Ordinance, 1980 (VI of 1980), shall at the time of export of goods by an industrial undertaking located in the areas declared by the Federal Government to be a Zone within the meaning of the aforesaid Ordinance, collect tax at the rate specified in Division IV of Part III of the First Schedule.
Source: *(Section 154 sub section (3A) of Part I of the Second Schedule to the Income Tax Ordinance 2001)
Repatriation of capital and profits
The return of capital from abroad to the country of its origin, by the transfer to the homeland of capital invested abroad, as well as the profits on it, and by the transfer of foreign currency earned from the sale of goods and services.
Issue of Securities and NIT Units to Persons Resident outside Pakistan on non-repatriation basis and its transfer on the same basis. (i) It is permissible to issue Pakistani Securities of all types including NIT Units but excluding shares of companies not quoted on stock exchange, in favour of persons resident outside Pakistan, on non- repatriation basis, if payment is made either in foreign exchange or in Pakistan rupees provided the securities are registered at the Pakistan address of the purchaser and a clear undertaking is furnished by him that no repatriation of capital and profits/dividends accruing thereon will be claimed at any stage. (ii) Such securities may also be transferred to a person, whether resident in or outside Pakistan, on the same basis, provided the securities are registered at the Pakistan address of the purchaser and a clear undertaking is given by him that no repatriation of capital and profit/dividend accruing thereon will be claimed at any stage. ( iii) A person resident outside Pakistan holding shares on non- repatriation basis may also be issued bonus/right shares as per his entitlement, on the basis of non-repatriation of capital and dividend
Source: (Foreign Exchange Regulation Act 1947) http://www.fia.gov.pk/en/law/Offences/11.pdf
No sales tax on input goods including electricity/gas bills,
To be a modern progressive effective, autonomous and credible organization for optimizing revenue by providing quality of service and promoting compliance with related to tax laws.
A registered person should also keep record of • Zero-rated and exempt supplies, • Record of invoices, credit notes, debit notes, bank statements, inventory records, Utility bills, salary and labor bills, rental agreements, sale purchase agreements and lease agreements.
Source: * (Sales Tax Guide by FBR) http://download1.fbr.gov.pk/Docs/201012211412172902008stax.pdf
Duty-free vehicles allowed under certain conditions,
To be a modern progressive effective, autonomous and credible organization for optimizing revenue by providing quality of service and promoting compliance with related to tax laws.
(10)(a) Import of vehicles shall be allowed without payment of customs-duty and other taxes as per the entitlements given in the table below, namely:- Quantum of Investment in EPZ Vehicles allowed as below:-
1. US$ 10.00 million or more up to US$ 25 million; 03
2. more than US$ 25 million but less than US$ 50 million; 05
3. equal to or more than US$ 50 million 10
but less than US$ 75 million;
4. equal to or more than US$ 75 million 15
but less than US$ 100 million;
5. equal to or more than US$ 100 million 20 25 (b) subject to a maximum of one motor car of upto 1600 c.c within the number of vehicles allowed and shall be further subject to the verification of the amount of investment and completion of the project within a time period of three years by the Export Processing Zone Authority.
Source: *(Export Processing Zone Rules) http://download1.fbr.gov.pk/Docs/20191241612575168ExportProcessingZonesRules(1)-converted.pdf
Presumptive tax @ 1%,
Only EPZA is authorized to collect Presumptive Tax at the time of export of goods which would be final tax liability,
The rate of tax to be deducted under sub-section (2) of section 153 shall be [1] %
Source: *(Income Tax Ordinance – 2001, The First Schedule Part – III, Division IV (Export)) http://epza.gov.pk/wp-content/uploads/2017/01/sros.pdf
Obsolete/old machines can be sold in domestic market of Pakistan after payment of applicable duties & taxes,
The Export Processing Zone Authority permits sale of obsolete/old machines in domestic market of Pakistan after payment of applicable duties & taxes
In exercise of the powers conferred by clause (k) of section 2 of the Export Processing Zones Authority Ordinance, 1980 (IV of 1980), the Federal Government is pleased to declare H4 Copper Project , Reko Diq, measuring about 15 sq.km, located within the following coordinators in Survey of Pakistan Topo sheet Nos. 30K and 30-G in Chagai District, Baluchistan, duly demarcated, fenced and bounded as under to be a Zone for the purpose of the said Ordinance: The subject project shall be an Export Processing Zone for the lease period of ten years subject to the following conditions, namely:-
a. The mining and project area specified will be walled and fenced by the respective company and will not be used for residential purposes;
b. The Export Processing Zone Authority will not provide any infrastructure facility in the area declared as Export Processing Zone;
c. The Export Processing Zone Authority development surcharge and the presumptive tax will be liable on the exports from the mining areas at the prevailing rate and rules;
d. The Zone will be zero rated for the imports into the project as specified above;
e. All transactions in the Export Processing Zone will be in foreign exchange; and
f. All other rules and regulations of Export Processing Zone Authority shall also be applicable.
Source: *(STANDING ORDER NO.05 /2002-(EXPORTS) (NO.SI/MISC/216/98-CUS/EPZ, dated 28-09-2002, Standing Order No.05 /2002-(Exports)) http://epza.gov.pk/wp-content/uploads/2017/01/sros.pdf
Defective goods/waste can be sold in domestic market after payment of applicable duties, maximum up-to 3% of total value and
To streamline the exchange of faulty goods exported to Tariff Area, EPZA has introduced procedure to meet the requirements and to facilitate the investors.
To streamline the exchange of faulty goods exported to Tariff Area, following procedure is laid down. i. Importers in Tariff Area will make a written request to the investor in EPZ for the exchange of faulty goods along-with the relevant documents i.e. GD, Invoice, Packing list. ii. The concerned investor will approach customs authority for seeking permission to bring back the faulty goods in Zone. After procuring permission to bring back the faulty goods to the examination area adjacent to the Customs EPZ by getting incoming gate pass from the EPZ Authority. iii. The custom examination staff will endorse the examination report on the request of the investor after satisfying himself to the effect that the goods brought in are identified as the same goods as were earlier exported from the Zone and are faulty/defective. iv. The custom staff posted at check post will examine the goods being replaced and after verifying the quantity etc. will endorse his report on the reverse of the request of the investor, on the basis of which the zone authority will issue an outgoing gate pass and the goods will be replaced. v. A master register shall be maintained by the customs office in EPZ to account for such transactions in the format given in Annexure “A”. vi. The EPZ Authority shall also maintain a register on the for referred to as “Annexure-A” as a permanent record. 2. The facility will only be available to the exporters when the request for the exchange of faulty goods is furnished within 07 days from the export of their consignment to Tariff Area.
Source: *(NO. SI/MISC/96/2009/CUS/EPZ September 28, 2009 OFFICE ORDER NO. 04/09/EXP/EPZ) http://epza.gov.pk/wp-content/uploads/2017/01/sros.pdf
EPZ units allowed to supply goods to Custom manufacturing bonds
In order to facilitate the Investors at KEPZ, Central Board of Revenue has allowed the facility of reverse sub-contracting in the Export Processing Zone by units based in tariff area and in this regard CBR has added rules 230 in sub-chapter (C ) of SRO 450(1)/2001, dated 18.06.2001.
In-order to prescribe the detailed Customs procedure for availing the facility of Sub-Contracting, the following instructions are hereby issued for immediate compliance by all concerned: 2. CENTRAL GUIDE LINES: The facility of sub-contracting shall be restricted only to such type of items which are capable of identification at the time of entry into and removal from the KEPZ, after the goods have been processed, embellished, worked and further manufactured, as the case may be. 3. APPLICATION BY INVESTOR: The investor, in the KEPZ, shall apply for reverse subcontracting work to be carried out by him on the prescribed format (annexed as ‘A’) in quadruplicate to the Assistant/Deputy Collector of Customs 1directly. Each copy shall be duly marked as ‘original’, ‘duplicate’, ‘triplicate’ and ‘quadruplicate’. The investor shall declare on each copy of application the relevant particulars of the reverse sub-contracting work e.g. name of the unit in the tariff area from which the goods are brought in, nature of the sub-contract, materials to be brought into the Zone, quantity, value of the imported inputs to be used by the unit in the KEPZ, its processing charges, etc. 1 The word “directly” added by letter No. SI/MISC/216/98-CUS/EPZ dated May 05, 2005 43 4. DOCUMENTS TO BE SUBMITTED BY THE INVESTOR: At the time of submission of application to the 2Assistant/Deputy Collector of Customs, the Investor shall submit the following documents along-with the application: a) A copy of the reverse sub-contracting agreement. b) An Indemnity Bond (as per annex-B) equal to double the amount of the value of the goods as given in the agreement. c) A post-dated cheque equal to the amount of Indemnity Bond. d) An undertaking to the effect that the sub-contracting work will be completed within the stipulated period. 5. 3deleted 6. ACTION TO BEA TAKEN BY CUSTOMS (KEPZ): i. 4After approval of the case by the Assistant /Deputy Collector of Customs, the Customs shall process the case in the light of rule-230, sub-chapter (C ) of SRO 450(1)/2001 dated 18.06.2001. The concerned Appraising Officer shall scrutinize and process the case for detachment of Indemnity Bond and post-dated cheque. The Appraising Officer, while processing the case, shall ensure that the value of the material being brought into the Zone and the value of the goods after processing are fair and in accordance with Section 25 of the Customs Act, 1969. He shall also check that the undertaking, Indemnity Bond and post-dated cheque submitted by the investor are equal to twice the amount of ascertained value of the material to be admitted into KEPZ for reverse subcontracting. ii. The Principal Appraiser (KEPZ) shall maintain a master register for each unit in KEPZ availing the facility of reverse sub-contracting. The Principal Appraiser shall also ensure that the relevant data of the application has been entered in the register maintained for the reverse sub-contracting. The Indemnity Bond and Post-dated Cheque shall be detached after approval from Assistant/Deputy Collector (KEPZ). The Assistant /Deputy Collector (KEPZ) shall allow the entry of sub-contracting goods into KEPZ for a period as he may deem fit. However, a maximum period of one year may be allowed by AC/DC (KEPZ) and, in rare circumstances, further extension may be allowed by the Additional Collector which shall not be more than 180 days in any circumstances. 2 Assistant /Deputy Collector of Customs substituted by letter No. SI/MISC/216/98-CUS/EPZ dated May 05, 2005. 3 Deleted vide letter No. SI/MISC/216/98-CUS/EPZ dated May 05, 2005 4 “After approval of the case by the Assistant/Deputy Collector of Custom” added by letter No. SI/MISC/216/98-CUS/EPZ dated May 05, 2005 44 iii. The Original copy shall be kept in the relevant file; duplicate, triplicate and quadruplicate copies of the application shall be handed over to the applicant or his authorized representative. The duplicate copy of the application, duly processed by Customs, shall be handed over to KEPZ Authority for issuance of Gate Pass. The applicant or his authorized representative shall deliver the triplicate copy to Customs Preventive staff at KEPZ Gate, while the investor shall retain quadruplicate copy for his own record. The Customs staff poste4d at the KEPZ gate shall endorse particulars of passing in of the material on the triplicate copy. They shall send the triplicate copy to Principal Appraiser (KEPZ) after all the material, to be admitted in the Zone, has been passed in or after the expiry of the time period allowed for sub-contracting. The Principal Appraiser (KIEPZ) shall get the consignment examined as and when the goods are admitted into KEPZ. He shall verify the particulars declared in the application and also have the unit surveyed, if required, for the issuance of analysis card. Such survey shall be conducted in case where consumption of the imported raw material by the investor is involved. If an earlier survey of identical nature has already been conducted, which is not more than one year old, re-survey shall not be required. 7. REMOVAL OF FINISHED GOODS FROM KEPZ TO TARIFF AREA i. After completion of the sub-contracting work, the Investor shall approach the Customs Authorities at KEPZ on the prescribed format (Annex-C) for removal of the manufactured goods,. He shall submit the final break-up of processed goods in terms of the total value, processing charges and value of imported inputs, if utilized. ii. On the basis of this application, the terms of contract and the unit consumption mentioned in the Analysis Card, if any, the Customs authorities shall examine the goods and endorse examination report on the serially numbered assessment slip, with five copies of each serial number (Annex-D). Duty and taxes shall be worked out on value addition only, keeping in view the provisions of Section 25 of the Customs Act, 1969. iii. Principal appraiser (KEPZ) shall retain the first copy of the assessment slip. Four copies of the assessment slip shall be detached and handed over to the Investor for payment of duty and taxes as worked out by the concerned appraising officer. The bank shall make endorsement of the payment on each of the four copies of the assessment slip. The duplicate copy shall be handed over to Customs Preventive Staff posted at the gate at the time of removal of goods from KEPZ to tariff area. The investor shall deliver the triplicate copy to KE4PZ authorities for issuance of gate pass. The Investor shall retain the quadruplicate copy for his record. 45 iv. Removal of the goods shall be allowed in the presence of the “Examining Officer of Customs (KEPZ). The Customs Staff posted at the gate shall endorse the vehicle number and the number of packages on the duplicate copy of the application. 8. RELEASE OF INDEMNITY BOND/POST-DATED CHEQUE: After removal of goods, the Investor shall apply to Assistant/Deputy Collector (KEPZ) for release of the Indemnity Bond and Post-dated Cheque submitted at the time of admission of the material into Zone. On being satisfied that all mate3rial brought into the Zone has been utilized and there after cleared on payment of duties and taxes in accordance with the procedure prescribed in this regard, he shall release the post-dated cheque and Indemnity Bond within three days of the receipt of application. 9. ACTION AGAINST THE INVESTOR: In case the investor fails to complete the sub-contracting or contravenes any provisions of law for the time being in force, the, the Assistant / Deputy Collector of Customs (KEPZ) shall proceed against the investor in terms of the Indemnity Bond submitted by him and the relevant penal provisions of the Customs Act, 1969 and the Rules made there under. (AFTAB ANWAR BALOCH) Collector
Source: *(STANDING ORDER NO.05 /2002-(EXPORTS) (NO.SI/MISC/216/98-CUS/EPZ, dated 28-09-2002, Standing Order No.05 /2002-(Exports)) http://epza.gov.pk/wp-content/uploads/2017/01/sros.pdf
Developed land on competitive rates for 30 years *(S.R.O. 1058(1)/81 dated 23-09-1981)
Domestic market available to the extent of 20% (exceptions may be available), *(S.R.O. 1058(1)/81 dated 23-09-1981)