ECC okays removal of 4% withholding tax, sales tax on locally manufactured mobile phones

ISLAMABAD, Pakistan: The Economic Coordination Committee (ECC) of the Cabinet on Wednesday approved the removal of withholding tax of 4% on manufacturing to retailers of locally manufactured phones to incentivize the sector.

In its meeting held in Islamabad with the Federal Minister for Finance and Revenue Dr. Abdul Hafeez Sheikh in the Chair, the removal of Sales Tax on locally manufactured mobile phones was also approved in principle and modalities would be worked out in consultation with the Finance Division.

In the meeting, the ECC also approved the Mobile Device Manufacturing and Electric Vehicles Policy (02-03 wheelers and HCVs {Heavy Commercial Vehicles}) presented by the Ministry of Industries and Production.


The ECC approved the following technical supplementary grants:

a) Rs 219.300 million for the operationalization of the newly established Isolation Hospital and Infections Treatment Centre, Islamabad.

b) Rs 305.462 million to pay off Pakistan’s annual contribution to the World Health Organization (WHO).


c) Rs 106.775 million to the ICT Administration for various projects

d) Rs 706.82 million for FATA, temporarily displaced persons, Emergency Recovery Project, NADRA.

e) Rs 278.091 million for Annual Contribution of Pakistan to UNFA, PPD & IPPF-FPAP for FY-2018-19, 2019-20 & 2020-21.

f) Rs 53.10 million for procurement of medical equipment, machinery, and medicines to combat COVID-19.

The Finance Secretary briefed the forum about the rationalization of subsidies (phase-I).

A detailed presentation was given by the Prime Minister’s Special Assistant on Revenue Dr. Waqar Masood focusing on Electricity, Food, and National Savings during the first phase.

The Chair appreciated the detailed plan for rationalization of subsidies, its various components and directed to present a comprehensive summary with concrete proposals suggesting a way forward before the ECC.

The Ministry of National Food Security and Research presented a summary for the provision of additional quantities of wheat to the Azad Jammu and Kashmir (AJK) government and the Utility Stores Corporation (USC).

The Chair directed to provide the first load of the additional quantities to both AJK and the USC on priority as an interim arrangement to ensure a smooth supply of wheat across the country.

The detailed proposal would be discussed in the next ECC meeting.

The ECC approved the new re-lending policy 2020 presented by the Economic Affairs Division.

The new re-lending policy will reflect the changes in the borrowing cost of the government, take into account variation in the exchange rate, and pass on actual rates to the borrower for transparency. Other terms and stipulations including with respect to recovery of commitment fee as in the policy in vogue, will continue to apply.

The ECC also accorded approval for the issuance of offshore Pakistan Rupee (PKR) linked Bonds to the International Finance Corporation (IFC).

This will help in the availability of financing to priority sectors, promote private sector investments, and bring foreign exchange liquidity in the domestic foreign exchange market in the post-COVID-19 scenario.

The Karachi Transformation Plan was postponed to the next ECC meeting.

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