Federal govt complies with G-B court ruling, adjusts tax collection on Chinese imports

The federal government has decided that taxes on imports from China will now be collected only after these goods enter mainland Pakistan, instead of tax collection in the Gilgit Baltistan territory. 

As per a news report, the government made this decision in response to the interim judgment by the G-B chief court, which declared that Pakistani income tax and sales tax laws do not apply to the G-B region. 

Consequently, the government will refrain from collecting taxes at the Sost Border post, as it was unable to secure legal relief from the courts. The Attorney General for Pakistan’s office advised honouring the court’s ruling for this special territory.

This decision was discussed during a meeting at the Federal Board of Revenue (FBR) Headquarters, chaired by Finance Minister Muhammad Aurangzeb. The meeting was attended by Minister of State for Finance Ali Pervez Malik and newly appointed FBR Chairman Rashid Mahmood Langrial.

Under the new arrangement, tax authorities will obtain post-dated cheques from importers while the court’s interim decision is in effect. If the final judgment is against the government, these cheques will be returned. 

The tax exemptions apply solely to the G-B area, and once imports from China enter Pakistan through Thakot, the federal government will collect all due taxes.

Last month, the G-B chief court ruled that income tax, sales tax, and additional sales tax collected on goods imported from China through the Khunjerab Pass were illegal. The court stopped the FBR and Customs from collecting these taxes, following a petition by the G-B Importers and Exporters Association.