Govt, GB traders reach breakthrough agreement on Sost import, tax exemptions

Deal grants Rs4bn annual tax relief on Sost imports, with exemptions limited to GB-owned firms under strict local-use conditions

ISLAMABAD:The Federal Government and traders of Gilgit-Baltistan (GB) have reached a breakthrough agreement on the long-standing issue of imports via Sost, paving the way for tax exemptions, clearance of stuck consignments, and a structured framework for future trade facilitation.

The announcement was made at a joint press conference held at the Federal Board of Revenue (FBR) headquarters on Wednesday. It was addressed by Federal Minister for Energy Awais Leghari, Senator Saleem Mandviwalla, GB Chief Minister Haji Gulbar Khan, and leaders of PML-N and PPP from GB. However, the officials surprised many by avoiding queries from the media regarding the details and conditions of the deal. Journalists present at the briefing questioned the terms of the agreement, but the officials only assured that a copy of the accord would be shared with the press.

According to official documents, the Federal Government has decided not to collect Sales Tax, Income Tax, and Federal Excise Duty on imports through Sost, subject to conditions ensuring that goods are strictly meant for local consumption within GB’s jurisdiction. Only firms and companies owned by indigenous people, duly authorized by the GB government, will qualify for the exemptions.

The total annual tax exemption has been capped at Rs. 4 billion, with allocations to be made on a first-come-first-serve basis under a transparent mechanism developed by the GB government. Goods imported beyond the allocated quota will not qualify for relief, while the exemption scheme will be reviewed every two years—or earlier if required.

For immediate relief, the government has prioritized early implementation of tribunal orders on stuck consignments at Sost Dry Port. The terminal operator has been directed to consider waiving delay and detention charges, while goods found violating the Import Policy Order will be confiscated after due process.

As part of implementation, the Federal Government has committed to issuing a Statutory Regulatory Order (SRO) within 30 days, following concurrence of all stakeholders. The GB government will designate a focal entity to coordinate authorization and quota allocation through the WeBOC system. Complete details of exemptions and beneficiaries will also be published on the FBR website to ensure transparency.

The agreement further stipulates that traders will wind up their protests upon signing, while customs authorities will take strict legal action against any misdeclaration. Disputes arising from the agreement will be resolved through consultation, with arbitration under the Arbitration Act, 1940, as a last resort.

While the breakthrough has been welcomed as a significant step to stabilize regional trade and address the grievances of the local business community, questions remain over taxation and its implications for GB’s status. The agreement now raises broader issues linked with tax jurisdiction and constitutional ambiguity in the region, which both government and political leaders avoided addressing directly during the press briefing.

The development follows weeks of protests by GB traders, who had been demanding relief on imports via Sost—the primary land trade route with China. Observers see the deal as a temporary but important measure, though much will depend on how transparently the exemptions are implemented and whether the promised facilitation reaches genuine beneficiaries in GB.

Ghulam Abbas
Ghulam Abbas
The writer is a member of the staff at the Islamabad Bureau. He can be reached at [email protected]

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