Govt. announces incentives for setting up shipping lines in Pakistan

Karachi, November 28, 2019 : The Ministry of Maritime Affairs has announced various incentives for foreign shipping companies for setting up private shipping lines and its operations located in Pakistan.

According to the officials, the incentives will be given in terms of duties and taxes that will be waived off for the period of the next five years.

“No Federal Taxes (direct and indirect) shall be levied to the detriment of Pakistan Resident Ship Owing Companies during the exempted period,” the official notification issued by the ministry said. These taxes include Federal Excise Duty (FED), and withholding taxes, etc.

The new shipping companies that will be called as Pakistan Resident Ship Owning Companies will be operated as Pakistan’s private shipping lines but will be the national flag carrier of Pakistan. Accordingly,  the new company is required to be registered with the Security and Exchange Commission of Pakistan.

These shipping companies will pay a tonnage tax of $0.75 GRT annually for the first five years of the shipping operations of each individual vessel. After the relaxation period, the company will pay $1 per FRT annually on the income of vessel operations.

The tax relaxation for new private shipping companies will remain valid until 2030.

It is pertinent to mention here that in order to provide protection to new entrants, the government set a tonnage tax of $1 annual GRT for Pakistan National Shipping Corporation (PNSC).

Industry experts believe that the decision of setting up private shipping lines is not only based on the economic front but also on strengthening the strategic areas of the country.

Pakistan’s based private shipping companies will not only attract investment but it will expand the local industry significantly with the generation of skilled employments and associated business.  

At present, the shipment of nearly 8 million ton liquid cargoes (petroleum products, chemicals, etc) is being carried out in Pakistan.  The share of PNSC stands at 20-22 percent in the liquid cargo, the rest of the shipment is being done by the foreign shipping companies, which also repatriate a lion share of the revenues to their different countries with headquarters.

The government has made these decisions in line with its new development policy of the shipping industry.  It made amendments in certain clauses of Pakistan Merchant Marine Policy 2001 after consultation with the relevant stakeholders for one and a half years.

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