ECC exempts machinery imports for OLMT from taxes and duties

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In a major decision, the Economic Coordination Committee (ECC) of the Cabinet on Friday decided to grant exemption from taxes and duties on import of machinery and equipment for the Lahore Orange Line Metro Train Project.

An official source said the committee also decided to extend similar exemption to other rail based mass transit projects in other provincial headquarters, Karachi, Peshawar and Quetta. The exemptions were granted as Chinese firms have raised serious concerns over the taxes and duties, which they said resulted in inordinate delays in release of machinery and equipment in case of any conflict over assessment of duty with tax authorities. It also increased the project costs.

The source said that the taxes and duties were deemed a cause of inordinate delay in the execution of the projects. The government wants orange line project completed or near completion before the next general elections. The government wants that all the development projects should be executed with full speed and would not tolerate red tape intervention to slow their progress.

It is important to mention that the JCC has approved rail-based mass transit projects in three provincial capitals, the Greater Peshawar Mass Transit, Karachi Circular Railway and Quetta Mass Transit. All these four mass transit projects have been made part of the CPEC framework.

The source said that a similar exemption for establishment industrial zones in provinces was also under consideration. The government has already granted exemptions for setting up industries in Gwadar. JCC has approved establishment of nine new industrial zones in different parts of the country, including one each in four provinces.

An official handout said Finance Minister Ishaq Dar chaired the meeting of the ECC meeting. The ECC approved the proposal of the Planning, Development and Reform Division at the request of the Government of Punjab to grant exemptions from withholding tax beyond 6 per cent of E&M contract price, and from taxes and duties on import of equipment to be installed for the Lahore Orange Line Metro Train Project.

The ECC also decided that a similar dispensation would also be extended to the other rail based mass transit projects in Karachi, Peshawar and Quetta at the appropriate time.

The meeting was informed that the Lahore Orange Line Metro Train Project has been made a part of the China-Pakistan Economic Corridor (CPEC) along with rail based mass transit projects in other provincial capitals at the recently concluded sixth Joint Cooperation Committee (JCC) meeting held in Beijing, China.