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Rs 10bn worth benefits given to Chinese firm through tax exemption

ISLAMABAD: Senate’ Standing Committee on Finance, Revenue, Economic Affairs and Narcotics Control informed that around Rs 10 billion worth benefits were given to a Chinese company working on the Multan-Sukkur Motorway in the form of tax exemptions.

Considering the Calling Attention Notice moved by Senators Muhammad Daud Khan Achakzai, Muhammad Mohsin Khan Leghari, Barrister Murtaza Wahab, Sitar Ayaz, Sassui Palijo, Nauman Wazir Khattak, Mukthiar Ahmed Dhamrah Aajiz, Kamil Ali Agha, Saleem Mandviwalla, Ahmed Hassan, Farhatullah Babar and Ilyas Ahmed Bilour regarding the issuance of SRO 47(1)12018, dated January 23, 2018, the committee asked the Federal Board of Revenue (FBR) that how the Chinese firm was given exemption depriving the local firms.

Pakistan Peoples Party (PPP) Senator Murtaza Wahab stated that the FBR granted this exemption at a time when the construction work was only 37 per cent complete without seeking approval of the federal cabinet. He said as per the constitution FBR has no right to issue SRO especially benefiting a foreign firm.

FBR Inland Revenues (IR) Policy Member Dr Iqbal replied that the Economic Coordination Committee (ECC) approved the exemption for this Chinese construction company which was later on ratified by the federal cabinet.

On the question of granting exemption after completion of 37 per cent work of the project, the FBR replied that this summary was moved by the Ministry of Communication so only they can give a reply to this question in more detail. The committee decided to summon the high-ups of the Ministry of Communication for seeking further details about this project in the next meeting.

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Senator Nauman Wazir Khattak informed the committee that the Supreme Court (SC) judgment clearly defines that the federal cabinet is the competent authority to issue SRO and recommended the finance committee to declare the said SRO illegal.

According to him, former finance minister Ishaq Dar had categorically stated on the Senate floor that all imports of China-Pakistan Economic Corridor (CPEC) would be non-discriminatory and no specific exemptions for CPEC projects for import of material would be given to Chinese companies.

At least 30 per cent work on Multan-Sukkur M5 Motorway has been completed and now the Chinese company is being given exemption from government duties whereas, in the original tender documents and the tender awarded to the company, the said duty was included in the project cost. In the original bid documents, all government duties were included. Exempting these duties at this point in time is unfair and unjust with other bidders who took part in the bid.

According to Khatak in the initial PC-1, the Bill of Quantities (BoQ) and specifications were different and in the final award, the BoQs have been reduced without informing other bidders and getting their rates as per the changed BoQs.

“The tender was floated and the bid was received a number of times, wherein there is a dramatic variation in the prices. Finally, the price was negotiated and BoQs were changed for this specific company. This is a violation of PPRA rules,” he said and recommended NAB to investigate all such matters.

Source: https://profit.pakistantoday.com.pk/2018/02/01/rs-10bn-worth-benefits-given-to-chinese-firm-through-tax-exemption/

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