ISLAMABAD: The Income Tax Amendment Ordinance 2022 will help in the revival of sick industrial units in Pakistan as it provides a lot of incentives to the industry, WealthPK reported.
Though the purpose of this ordinance is to encourage investment in the industrial sector, incentives will also be given to revive sick industries. This amendment act has added sections such as 100F, 65H, 59C to the Income Tax Ordinance of 2001.
As per this ordinance, investors are only required to pay a fixed tax of 5 percent on assets they declare when establishing new businesses and no questions will be asked about the sources of the investment.
This ordinance will also provide foreign currency risk cover to local manufacturers for their machinery imports so that they remain safe from currency’s devaluation impact. Foreign investors will be provided a tax holiday for five years in the case of a single investor and a joint venture with a Pakistani partner.
Incentives are also provided to overseas Pakistanis to invest in the industrial units of Pakistan. As part of this ordinance, those ready to invest in Pakistan would be required to file a statement by September 30, 2022, declaring the amount of funds they intend to invest in a newly formed company established and managed for industrial purposes.
According to the amendment related to the investment, the funds must be deposited in rupees into the newly created company’s bank account in Pakistan. According to the Company Act 2017, these funds can be used only to buy buildings structures and import machinery.
The amendment also provides three years of tax amnesty for investing in sick industrial units of Pakistan.
The industries of a country play a significant role in the development procedure. Besides providing a huge number of employment opportunities, industries also contribute a lot to the country’s gross domestic product (GDP). Pakistan’s industrial sector contribution to GDP was 28.11 percent in FY2021.
The industrial sector still has the capacity to increase its share, as long as policymakers remain cognizant of neglected units in the sector.
Most part of Pakistan’s industry is not registered, which is one of the reasons for sick industries. The more companies are registered, the more revenue will be generated. Pakistan must focus on providing more incentives to investors ready to register their companies with the Federal Board of Revenue (FBR).
Moreover, the owners of sick units must be provided loans on lower interest rates for a long-term maturity so that they get enough time to re-establish the sick industry. New amnesty schemes should include profitable incentives to convince big investors to invest in the sick units of Pakistan.
INP
