Solar Power equipment may get exempted from taxes

Ministry of industries and production (MoI&P) has presented a draft on “solar
panel and allied equipment manufacturing policy 2023”, according to which, it is
highly likely that the government would exempt the solar energy equipment and
machinery of all applied taxes. This step is being taken to promote the use of solar
energy and green electricity supply for industrial as well as residential purposes.
The draft was presented to the Economic Coordination Committee (ECC) for
further observations and approval.

According to the presented draft, the recent global issues regarding the energy
and economy including a global hike in the fuel prices and increased energy
import bill has pressurized the Balance of Payment of the country. Subsequently,
the government of Pakistan has started focusing on increasing the share of green
renewable energy sources including solar energy from current 40 Percent to 90
percent by 2031. For this purpose, the prime minister has also approved the plan
to generate 10,000 MW of solar energy to fix the energy crisis. According to
reports, the country is already witnessing a surge of the use of solar energy in the
current times.

The demand for solar equipment after tax exemptions will increase which will
result in the creation of a huge potential market for solar equipment and
machinery as both local and foreign investors have already been looking forward
to investing in the market.

The committee made by the PM of Pakistan on “indigenous production of solar
panels and allied equipment “proposed a policy for the promotion of solar energy
usage and Allied equipment manufacturing. Several interventions of the policy
include a consistent 10-year policy framework to enable long term investment by
domestic & global companies, exemption from duties and taxes on import of
inputs (CKD & raw materials, sub-components, components, sub-assemblies) used
in manufacturing of solar panels, parts and allied equipment, exemption from all
duties and taxes on import of plant, machinery and equipment for new and BMRE
plants used for manufacturing of solar panels and allied equipment, equal
treatment in Sales Tax for local manufacturers and importers and bank financing/loans at low interest rates for setting up local manufacturing and installation along with other significant points.

The policy is said to be expected to have an immediate positive effect on the
market as well as promotion of the usage of renewable energy sources which will
be helpful to the fulfillment of original aims and goals of the government
regarding the matter.