ISLAMABAD - For CPEC projects, Chinese companies are procuring major part of machinery, equipment and material, which is being imported from China at concessional rates.
According to the Ministry of Planning, Development and Reform data, material for civil work - sand, cement, steel - and consumable items like diesel, paints, major chunk of chemicals, gas required for power plants are procured locally. The major part of material, equipment and machinery is being imported. The reason for procuring the materials and machinery through import is due to non-availability of required items locally on such a large scale.
Mechanical, electrical equipment, cranes hydraulic turbines, boilers, generators, governors system, main transformers and GIS system are not available locally in large quantity so these all items are being imported from China. Under the CPEC, jobs have been offered to Pakistani unskilled and skilled labour for civil works, including engineers and technicians. Likewise, Pakistani engineers, technicians and office staff have been hired for operation of the projects in some proportion. Local companies are also getting business and jobs in transportation and security of the projects.
According to the Ministry of Finance data, the government has provided tax exemption to CPEC related projects executed by the Chinese companies. China State Construction Engineering Corporation Limited has been granted tax exemption for the construction of Sukkur-Multan Section of Karachi-Peshawar Motorway and to China Communication Construction Company for construction of Thakot-Havelian Section of Karakorum Highway.
Exemption from customs duty and sales tax has been provided on import of machinery, apparatus and materials by China Railway Corporation for Lahore Orange Line Metro Train Project. Following additional concessions have been provided to Concession Holder of Gwadar Port Authority, its operating companies, contractors and subcontractors:
Income derived by China Overseas Ports Holding Company Limited and its four operating companies namely China Overseas Ports Holding Company Pakistan (Private) Limited, Gwadar International Terminal Limited, Gwadar Marine Services Limited and Gwadar Free Zone Company Limited from Gwadar Port operations has been granted exemption from income tax for a period of 23 years, with effect from February 6, 2007.
Interest income earned by a foreign lender or any local bank (having more than 75pc shareholding of the government or the SBP) is exempt from income tax for a period of 23 years with effect from the July 1, 2016. Income derived by contractors and sub-contractors of China Overseas Ports Holding Company Limited and its four operating companies from Gwadar Port operations has been granted exemption from income tax for a period of 23 years, since July 1, 2016.
Dividends received by China Overseas Ports Holding Company from its four operating companies have been granted income tax exemption for a period of 23 years with effect from 2016. Moreover, dividends received by China Overseas Ports Holding Company Pakistan (Private) Limited from other three operating companies have been granted similar exemption.
Exemption from Sales Tax, Federal Excise Duty and Customs Duty has been granted on materials, equipment and vehicles for construction and operation of Gwadar Port and Gwadar Free Zone. Exemption from sales tax and FED for a period of 23 years has also been provided to supplies to be made by businesses established in Gwadar Free Zone