The expatriates have been urged to capitalise on these incentives to invest in the country of their origin and reap the benefits as was being done by many multinationals.
The budget 2004-05 announced by Federal Finance Minister Shaukat Aziz has outlined the strategy to address poverty and to ensure that gains of economic turnaround trickle down to the poor sections of the society.
Besides, it announced following incentives and concessions for the expatriates, said official sources on Monday.
Sales tax and withholding tax on import of plant machinery and equipment has been withdrawn which would reduce the cost of project, making it more viable, and encourage industrial growth in the country.
Sales tax on import of tractors, bulldozers, combine harvesters and agricultural implements including fertilisers and phosphoric acids has been abolished. This will give boost to agriculture sector and overseas Pakistanis should now benefit from this. In order to encourage use of cellular phones, activation charge of Rs 2,000 has been reduced to Rs 1,000. To promote SMEs, the turnover tax scheme has been abolished and exemption has been being raised to Rs 5 million for manufacturers and retailers.
Income from capital gains has been extended for another two years ie up to June, 2007. Income tax limit on senior citizens has been increased from Rs 200 000 to Rs 300,000.
The Baggage Rules for overseas Pakistanis have been further relaxed. Passengers with less than six months stay abroad: The additional benefits now allow passengers to take one CD player, one DVDJ, one VCD, one watch and one tape-recorder. The allowance to lady passengers for taking personal jewellery has been increased from US $600 to $1000; gifts from US $225 to US $300. Similarly, the entitlement for purchases from duty-free shop, free of custom duty and other taxes has been increased from US $250 to US $500.
Passengers with more than six months stay abroad: The additional passengers are now entitled to take personal jewellery for US $1,500 (from US $1,100) and professional tools, instruments, apparatus and appliances acquired abroad in connection with his profession up to the value of US $2,000 (from US $1,100).
The additional benefit entitles them to take one DVD player, one tape recorder, one VCD player, one watch, one hi-fi sound system, one sewing machine and one exercise machine. The entitlement for purchases from duty-free shop, free of custom duty and other taxes has been increased from US $450 to US $1,000.
Overseas Pakistani doctors returning home can now import second-hand or used medical equipment, dialysis machines and similar equipment on payment of duty and taxes.
Import of Vehicles by Overseas Pakistanis: The overseas Pakistanis are entitled to import vehicle under the following schemes.
Gift Scheme: The car cannot be more than two years old and can be gifted to parents, husband, wife and children whether married or not, above the age of 18. The person gifting the vehicle can do so after his stay abroad of more than two years is complete.
Personal Baggage: The car can be taken under personal baggage if the applicant has lived abroad for more than 180 days within the last seven months preceding the date of application and the car is not more than two years old and is registered in the name of the person for the last sixty days prior to his departure.
Transfer of Residence: Pakistanis living abroad for more than two years can take one car back home on transfer of residence if the car is registered in his name for the last one year. The vehicle allowed under this scheme can be as old as the applicant desires to take for his personal use.
A motorcycle or scooter shall be allowed to be imported upon transfer of residence provided that their shall be no entitlement to import a vehicle and the same conditions shall apply mutatis mutandis, as are applicable to the import of vehicles.
Furthermore, in order to encourage the agriculture sector tractors, bulldozers, laser land levellers and combine harvesters are being added to the Gift, Baggage and TR Schemes.
The Rules for Gift Scheme regarding such equipment have been relaxed to allow their import subject to the same conditions as applicable for import of vehicles, excluding the requirement of registration. However, import thereof under gift scheme will be allowed once every year.
The new rates of duty on import of vehicles, motorcycles. scooters and agricultural implements to Pakistan are given below: The car up to 1000cc the Customs Duty would be charged 50 percent (ad val) plus 15 percent Sales Tax and 6 percent With Holding Tax.
The car of up to 1500 cc, the Customs Duty would he 70 per (Ad Val), 15 percent Sales Tax and 6 percent Withholding Tax.
The car with 1600 cc will be charged 80 percent (Ad Val) plus 15 percent Sales Tax and 6 percent Withholding tax. All cars above 1800 cc will be charged 100 percent (Ad Val) plus 15 percent Sales Tax and 6 percent Withholding tax.
The Customs Duty on Four- wheel drive vehicles (4+4) will be charged with 150 percent (Ad Val) plus 15 percent Sales Tax and 6 percent Withholding tax.
Buses/coaches will be charged with 25 percent (Ad Val) plus 15 percent and 6 percent Withholding tax, On the Trucks/pick-ups the Customs Duty would be 60 percent (Ad Val) plus 15 percent Sales Tax and 6 percent Withholding tax.
On the import of Vans or Motor vehicles for the transport of ten or more persons including driver, the Customs Duty would be 25 percent (Ad val) plus 5 percent sales tax and 6 percent Withholding tax. Other vans below ten persons capacity the Customs Duty would he 100 percent (Ad Val) plus 15 per sales tax and 6 percent Withholding tax.
On the import of motorcycles and scooters the Customs Duty would be 90 percent (Ad Val) plus 15 percent sales tax and 6 percent Withholding tax.
On the import of tractors, bulldozers, laser land levellers and combine harvesters, the Customs Duty would be 20 percent (Ad val) plus 15 percent Sales Tax and 6 percent Withholding tax.
Assessment of Vehicles: The vehicles are assessed on the basis of fob value certified by the manufacturers to be the price applicable to a particular vehicle at the time of its manufacture. The freight component is added on the fob value and then the depreciation on used vehicles is allowed at the rate of 4 percent per month for first three months and 2 percent per month for subsequent months.
The depreciation is allowed for the period between the first registration abroad and the date of shipment.
Duty Calculation Method: The duties are calculated on vehicles based on fob value including agents commission and by including freight and insurance to arrive at assessable value. On this value, rate of customs duty (as per vehicle capacity) is applied to obtain payable custom duty.
The custom duty so determined is added to the ascertained value and on this enhanced value (custom duty paid value), sales tax @ 15 percent is applied to obtain levy able sales tax.
The sales tax so determined is added to the custom duty value to obtain value for 1evy of advanced income tax @ 6 percent. The depreciation is allowed on the vehicle can its fob value at the percentages of 4 percent for first three months and two for subsequent months subject to a maximum of 50 percent.
Under the new trade polity many liberalisation measures have been announced.
PROJECT RELOCATION SCHEME: Relocation of projects from abroad is presently allowed only for a few industrial sectors. This scheme is now being liberalised to cover all industrial sectors.
Spare parts on the regular inventory list of such projects will also be importable. Import of project machinery and equipment under relocation scheme will be permissible even if it is locally manufactured in the country.
However, such machinery and equipment will need to be certified by a prescribed and internationally recognised preshipment inspection company (PSI) that it is in good working condition and has a remaining life of at least 10 years. The facility however will not be available for controlled sectors ie arms and ammunition, radioactive substances, high explosives, currency and mint, security printing and alcoholic beverages.
ALLOWING IMPORT OF DONATIONS: Import of used fire fighting vehicles or fire tenders donated free of cast to Municipal Bodies is being allowed. Also, import of second-hand ambulances donated free of cost to institutions registered under the Income Tax Ordinance as charitable organisations is also being allowed. However, such equipment may not be older than five years.
EXPORT OF SAMPLES: At present, exporters can send samples of non-restricted items valuing US $10,000 FOB per annum. This limit is now increased to US $25,000.
FACILITATING RE-EXPORT OF IMPORTED GOODS: To facilitate re-export of imported goods the condition of value-addition has been waived. Furthermore in case of re-export through land route, the requirement of payment of full duty has also been waived. Such re-exports will be entitled to a refund of 1 percent warehousing surcharge.