Investment Incentives

Taxation

It is a matter of major importance to the authorities in Pakistan to expedite the development of the Thar coal resource as quickly as possible. With this in mind the Government has announced various fiscal incentives to promote investment and development of the Thar Coal Field. The major items are:

  • Lifetime exemption to profits and gains of coal mining companies from a coal mining project in Sindh, supplying coal exclusively to power generation projects;
  • 30 years exemption from withholding of income tax from dividends paid to shareholders of coal mining and coal based power projects in Sindh;
  • Exemption from withholding of tax on supply of goods / services during construction and operations of coal mining and coal based power projects in Sindh;
  • Exemption from Customs Duty and Sales Tax for plant and machinery imported for the Thar Coal Field; and
  • Exemption from Sindh Sales Tax on construction services relating to construction and development of SEZ (Special Economic Zones).

Protection under Pakistani Law

The Government of Pakistan introduced a Power Policy entitled “Policy for Power Generation Projects 2002” which, inter alia, focused on the use of indigenous resources including coal for power generation. The Power Policy 2002 is designed to attract international investment into Pakistan for the development of indigenous resources including coal for power generation. The International Investment Treaties also provide that international investment has the same protection in law as does domestic investment.

The State Bank of Pakistan (SBP), the Pakistani Central Bank, has regulations in place for providing foreign exchange for the remittance out of Pakistan of loan repayments (interest and capital), repatriation of investment in equity, and dividends released in local currency. Oracle and its subsidiaries are duly registered with SBP.

International Investment Protection Treaties

Both the UK (in 1994) and China (in 1989) have entered into bilateral Investment Treaty with Pakistan in 1994, offering protection against unjustified expropriation and, where justified, the timely payment of compensation. Restrictions shall not be placed on remittance out of Pakistan.