The government of Pakistan has decided to declare five zero-rated sectors, which are eligible for incentives, as export-oriented sectors, according to a report by a local newspaper.

The report stated that this proposal will be tabled before the Economic Coordination Committee (ECC) of the Cabinet on Wednesday (today).

Sharing the background, the report quoting sources said, Statutory Regulatory Order (SRO) 1125(1) 2011 of December 31, 2011 issued by the Revenue Division was the only legal instrument used for the identification of the sectors eligible for the zero-rated incentives package of the Federal Government.

With the rescission of the SRO 1125(1)2011 through the Finance Act, 2019, the available legal instrument has ceased to exist, thus, making it difficult for the concerned government departments to identify the zero-rated sectors, stated the report.

In order to resolve the issues related to this issue, the ECC, in its decision of August 8, 2019, constituted a committee under the chairmanship of Minister for Economic Affairs, comprising Special Assistant to the Prime Minister on Petroleum, Secretary Finance, Secretary Commerce and Chairman FBR, to review the proposal of the Petroleum Division and submit its recommendations to the ECC.

In pursuance of the decision of the ECC of the Cabinet, the committee held a series of meetings. During the second meeting of the committee, the committee tasked the Commerce Division to issue a clarification or SRO, in place of the rescinded SRO 1125(1) 2011 to define the new nomenclature of the previously zero-rated industry.

Subsequently, the committee, in its meeting held on October 23, 2019, agreed that the nomenclature of the sectors mentioned in the ECC decision of August 8, 2019, will be “export-oriented sectors, which includes textile, carpets, leather, sports and surgical goods”, and the Commerce Division will issue the necessary SRO for clarification of the new nomenclature.

Citing the recommendations of the committee, Commerce Division has proposed that the erstwhile zero-rated sectors may be declared as “export-oriented sectors”.