Pakistan Government has granted exemption from custom duty, general sales tax and withholding of income tax on import of ships and all floating crafts including tugs, dredgers, survey vessels and other specialized crafts purchased or bareboat chartered by a Pakistani entity and flying Pakistan Flag.
The exemption shall be valid upto year 2020 and will be effective from 1st. July, 2016. This was announced by Mir Hasil Khan Bizenjo, Federal Minister for Ports & Shipping in a seminar on “Prospects of Shipping Sector in Pakistan” organized by Pakistan National Shipping Corporation (PNSC) in Karachi today.
The long awaited incentives are expected to boost shipping industry and improve infrastructure as well as encourage private investors to invest in shipping sector.
The Minister has invited foreign and local investors to come forward and invest in shipping sector in order to make Pakistan more prosper in years to come. The Minister stated “the ball now is in the investors’ court”.
“I am pleased to inform you that our Ministry is presently working in support with other ministries to improve port infrastructure, streamline supply chain management and developing of existing national fleet”, the Federal Minister added. While talking Senator, Mir Hasil Khan Bizenjo also highlighted the volatility that prevails international shipping and also shared reasons resulted in recent downturns which has posed significant risks to shipping market.
Earlier, while addressing the audience, Mr. Arif Elahi, Chairman PNSC highlighted the global perspective on role of merchant shipping. He also briefed about the merchant shipping of Pakistan, specifically the role of PNSC in uplifting trade, economic activities and supporting oil supply chain of Pakistan. He appreciated the efforts of MoP&S in abolishment of customs duty, general sales tax and withholding tax on imports of ships and all floating crafts including tugs, dredgers, survey vessels and other specialized crafts purchased or bareboat chartered by Pakistani entity and vessels flying Pakistan flag.
The government was collecting 17% sales tax, 10% custom duty and 6% withholding tax on import of vessels that was hindering the flourishing of the shipping industry in Pakistan, remarked by Chairman, PNSC.
He said there is no duty on import of ship in Panama, Liberia, Marshall Island and The Bahamas, thus a large number of vessels are registered there.
Chairman PNSC while emphasizing the importance of maritime industry also highlighted PNSC’s performance which has been outstanding in the last decade. He added that the current PNSCs fleet comprises modern vessels with deadweight carrying capacity of 681,806 metric tons – highest ever since its inception. PNSC’s profitability continues to increase with a net profit of over 2 billion rupees with foreign exchange savings of over USD 1.5 billion. PNSC has also paid dividends and taxes to GoP which amounts to billion of rupees and contributing its part in economic growth of Pakistan.
“The current national seaborne trade of Pakistan stands at 73.0 million tons and looking at the potential of this sector, we expect this figure would reach to 95.0 million tons by year 2020”, stated Chairman PNSC.
Mr. Arif Elahi further encouraged the participants to invest in maritime sector of Pakistan in areas i.e. oil tankers, bulk carriers, container vessels, LNG carriers, oil storage and anciliary shipping services to strengthen national fleet and improve shipping services in Pakistan.
“I invite all the stakeholders to fully utilize these benefits of exemptions of duties and taxes and welcome to enter into Joint venture with PNSC in acquiring vessels for your own usage. This shall not only save country’s huge valuable foreign exchange but will also improve our cost and reduce dependency on foreign carriers which will ultimately benefit investors and shareholders by means of higher profitability” said Chairman PNSC.
Mr. Khalid Pervez, Federal Secretary for Ports & Shipping also expressed his gratitude to Federal Minister for Ministry of Ports and Shipping for his untiring efforts in pursuing GoP to abolish the Custom Duty, General Sales Tax and Withholding of Income Tax on import of ships and all floating crafts.
“This remarkable decision will help Private Sector to invest in the maritime sector and will also provide golden opportunity to them to join PNSC through public private partnership”, the Federal Secretary added. He said that he would welcome further suggestions for betterment of shipping sector.
The Federal Secretary, MoP&S appreciated the efforts made by Chairman, PNSC and his team in the commercial and financial performances during this last financial year introducing reforms in the organization and thanked them for organizing such an informative seminar.
The purpose of the seminar was to highlight the recent exemptions by the present government on Custom Duty, General Sales Tax and Withholding tax on imports of ships and other floating crafts. The house was full with prominent representations from Pakistan’s shipping industry and stakeholders both from public and private sectors. The seminar was aimed to promote shipping sector of Pakistan, promulgate policies and incentives to ensure growth and prosperity of Pakistan’s maritime sector and encourage and attract local and foreign investors.
The seminar was also addressed by Commander COMPAK Vice Admiral Arifullah Hussaini who proposed Federal Minister for Port and Shipping to allocate small plots in coastal area of Baluchistan to poor people for setting up salt extraction unit from sea to earn their livelihood.