Delegation protests imposition of GST on export processing zones

An eight member investors delegation of the EPZs – Export Processing Zones met Prime
Minister Imran Khan on Tuesday, January 11, 2022; in the presence of Finance Minister
Shaukat Tarin and Chairman FBR to discuss the illogical imposition of GST in the EPZs,
where from 100 per cent goods are exported.

The delegation explained the consequence of increased working capital requirement with
no benefit to the Government of Pakistan where 100% would be refundable. It was further
reiterated that foreign/Local investor confidence would be shattered upon such a change in
policy where contracts between the Government and Investors were in place for incentives
to remain until the completion of the 30-year agreement. Furthermore, incentives including
exemption of GST/VAT in Free Zones in the region such as Bangladesh and Sri Lanka were
shared and explained that Pakistan would be uncompetitive by the withdrawal of the GST
exemption.

The Finance Minister and Chairman FBR shared shocking figures of the Import versus Export figures of the EPZs which were challenged by the Investors as the data they were referring to was not reconciled with EPZA(Export Processing Zones Authority- an autonomous body working under the umbrella of the Federal Government). The investors shared figures retrieved from EPZA where Exports stood at $908 million versus an Import of $428 million (Period 2020-2021) and tax/service fee paid was to the tune of $13.6 million for the same period. The Chairman FBR assured the investors that he would investigate why the figures shared with him were not aligned.

Earlier, the delegation also met with the members of the Senate Standing Committee on
Finance as well as Chairman Board of Investments.

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The Investors explained the concept of Free Zones worldwide and the illogical decision of
collecting GST at Import stage when the entire amount would be refundable at a hidden
cost. Industries in the EPZs would render unfeasible and eventually close, resulting to a loss of $13.6 million by the exchequer which they are currently collecting.

The investors appreciated the PM for a patient hearing and his assurance of a follow-up
meeting for a conclusive resolution of the problem.

The investors delegation included Mustafa Hemani, Muhammad Idrees Gigi, Waseem
Akhter, Sadiq Ali Haji, Iqbal Ayub, Muhammad Hassan Siddiq, Khawaja Masood Akhtar and
Javaid Mahmood Sethi.

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