Pakistan’s First Tax-Free and Weapon-Free City

CPEC has been a dominant topic in Pakistan’s media during the past decade, and with good reason. As we all know, it is an unprecedented opportunity for Pakistan that has enormous economic and geopolitical implications. It will allow us to finally connect our Gwadar port to mainland China via motorways and railways which in turn would increase bilateral trade exponentially over the years. nnWith modern infrastructure development that now includes Pakistan’s largest International Airport, luxury resorts, mega shopping malls, high-tech industries, and Chand Tara man-made island, Gwadar is soon expected to become the 3rd largest city of Pakistan in terms of economic output.nnRecently the government of Pakistan has announced the establishment of a free zone in Gwadar, to be known as the Gwadar Port Free Zone. So, the most important thing about the Gwadar Port is that it would be a tax-free and weapon-free zone.nnThe tax concession for the Gwadar zone was a longstanding issue and probably the only bottleneck in the way of populating the industrial zone. The decision to amend the income tax ordinance, customs act, and sales tax was taken in 2019, and the rules of legal proceedings were crafted this year. nnIn 2021 the Federal Board of Revenue (FBR) issued rules for the first-ever tax-free zone in Pakistan. The documents entail tax exemptions, tax concessions, and incentives procurable to investors in the Gwadar zone. nnThe goods declaration will be filed by the cleaning agent or investor duly authorized as per the legal documentation. All goods imported into the zone will be examined under the provision of Custom Act 1969 and thereunder. The granted concession under the Custom Act and the Gwadar Port Authority will be applicable to equipment, machinery, plants, and apparatus that are to be used solely within the limits of Gwadar Free Zone. nnThese amendments make Gwadar a free economic zone that provides a range of economic incentives to the investors in order to attract investment and promote foreign trade. The setting up of this tax-free zone (TFZ) will give investors complete freedom in business activities and no taxes will be levied on them.nnApart from being tax-free, the government of Pakistan, along with the Pak army, are attempting to make it more and more secure for the investors. The security of Gwadar and its surrounding areas have already been a serious concern for the military of Pakistan. nnIn 2016 a Special Security Division was entrusted with the safety of individuals working under CPEC. SSD comprised 9000 soldiers of the Pakistan Army and 6000 paramilitaries who were assigned the duty of protecting the region. nnApart from alleviating security concerns on land, the Government of Pakistan has also taken initiatives to secure the coast through the maritime security agency and Pakistan Airforce. nnDuring his recent visit to Gwadar, Prime Minister Imran Khan also stated that he was mulling over having a talk with the Baloch insurgents. He further added that peace in the region is quite pertinent for the development of the country’s western province. nnTo wrap up the discussion, Gwadar is the most secure investment because of the involvement of the Pak Army and the Chinese officials in the historical project of CPEC.