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Pakistan is in a best position for FDI

Khalil Ahmed
Pakistan is in a best position for FDI

Interview with Mr Ashfaq Yousuf Tola — President, TOLA ASSOCIATES

[box type=”shadow” align=”” class=”” width=””]Profile:

Professional Accomplishments

Memberships:

Key Achievements:

Areas of Expertise:

Key Positions:

Federal Board of Revenue, Government of Pakistan:

Institute of Chartered Accountants of Pakistan:

South Asian Federation of Accountants:

Federal Tax Ombudsman:

Member Advisory Committee (South) (Present)

Pakistan Institute of Corporate Governance:

Pakistan Institute of Public Finance Accountant:

Institute of Cost & Management Accountants of Pakistan:

Karachi Club

Professional Experience

PAKISTAN & GULF ECONOMIST had an exclusive conversation with Mr Ashfaq Yousuf Tola regarding FOREIGN DIRECT INVESTMENT and EASE OF DOING BUSINESS. Excerpts of the conversation are as follows:

A crucial aspect and effect of globalization has been cross-border flows of foreign direct investment (FDI) and the footprints created by multi-national companies. Every developing nation is striving to implement investment liberalization policies to enhance growth by attracting FDI.

Pakistan has been working towards creating a better environment for businesses that also promotes ease of doing business. Moreover, it has also been open to foreign investment with creation of Economic Zones and Linkages of trade and industrial and monetary policies for greater convergence. Taxes in Pakistan are categorized into two types: Direct and Indirect Taxes. Direct Tax includes Income Tax which is a federal subject as per the Constitution of Pakistan 1973. Hence, it is being administered by the Federal Board of Revenue under the Income Tax Ordinance, 2001 and its related rules. Indirect taxes include Sales Tax on Goods and Services, Excise Duty and Customs Duty etc. All the indirect taxes, except for sales tax levied on services, are a subject matter on which the Federal Government has competency to legislate, and hence, are administered by the FBR.

Sales tax on goods is governed under Sales Tax Act, 1990 and its related rules, whereas excise duty on goods and services is covered under the Federal Excise Act, 2005 and its related rules. Moreover, Custom Duty and Regulatory Duty is levied under the Customs Act, 1969 and Pakistan Customs Tariff. Since sales tax on services is a provincial subject, all the four provincial tax authorities have promulgated their respective sales tax on services acts and the rules thereon.

It may be noted that sales tax on services within the Islamabad Capital territory is the domain of the FBR for which the FBR has issued Islamabad Capital Territory (Tax on Service) Ordinance, 2001. Foreign Direct Investment (FDI) in Pakistan is governed under policies issued by Board of Investment (BOI) from time to time including privatization, liberalization, and deregulation, which is in line with the existing transformation of Pakistan as a regional trade hub and increased regional connectivity through China-Pakistan Economic Corridor (CPEC), political stability and revival of economic growth to catch up with the Eastern Asian economies.

Some of the relevant portions of the BOI policy have also been described in document. Naturally, if foreign and local investment is made in the corporate sector, the Companies Act 2017 is of paramount importance. Similarly, regulations made by the SECP pursuant to different sections under the Companies Act 2017 are also essential.

Pakistan has a rapidly growing youth population, with 64% of its population being younger than the age of 30. A young population can always be the catalyst to success for a country and be the driving engine for economic growth. Moreover, the world has just recently, and finally, started tapping the potential in the start-up sector(s) of Pakistan.

A statistic testament to this is that there has been investment worth USD 305 million during January-September 2021. Combine all these factors with the potential opportunities the China Pakistan Economic Corridor brings to Pakistan, it is one of the most exciting countries to invest in at this point in time, with a lot of potential business opportunities in the offing. A crucial thing CPEC has brought with it is the significant improved and efficient transportation system across the country. It may be noted that legal protection to foreign investment in Pakistan is fully protected by the following legislation:

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