ISLAMABAD: The federal government, the Gilgit-Baltistan (GB) government and G-B traders’ representatives have signed a landmark agreement to resolve long-standing disputes over the Silk Route Dry Port (SRDP) at Sost.
The agreement comes in wake of a two-month-long protest staged by G-B traders at Sost border which disrupted trade and transportation along the China-Pakistan Economic Corridor (CPEC) route at Sost. The G-B traders had been protesting against the Federal Board of Revenue (FBR) and Customs, demanding the implementation of a recent chief court decision regarding tax exemptions for local traders.
The traders have been staging a sit-in outside the Sost Dry Port, protesting against the collection of taxes on Chinese imports through the Khunjerab Pass.
The new agreement provides for annual tax exemptions of up to Rs4 billion on imports meant for local consumption in G-B, disposal of stuck consignments, and stricter monitoring mechanisms to ensure transparency.
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The agreement, signed by federal ministers, G-B leadership and traders, seeks to ensure smooth functioning of the Sost Dry Port, enhance cross-border trade, and safeguard the rights of the indigenous population of G-B
Tax exemptions for GB
Under the agreement, the federal government will not levy federal taxes such as sales tax, income tax and excise duty on imports via Sost Port, as these are not extended to GB. The relief, however, comes with strict conditions:
It said that imports must be meant for local consumption within G-B; goods can only be brought in by indigenous-owned firms authorised by the GB government; Customs declarations must be accurate and within approved tariff lines; exemptions will be capped at Rs4 billion annually, reviewed every two years; any attempt to smuggle exempted goods outside GB will lead to partial or complete withdrawal of the concession and Customs will also conduct annual inspections, and violations will carry heavy fines.
Disposal of stuck consignments
The government also pledged to expedite tribunal orders regarding pending consignments at Sost Dry Port. The terminal operator will consider waivers on demurrage and detention charges, but goods imported in violation of the Import Policy Order will be confiscated after due process.
Implementation and transparency
According to the agreement, the federal government will issue an SRO on tax exemptions within 30 days.
The G-B government will set up a focal entity and an online system with FBR to allocate quotas transparently. Details of exemptions granted to individual importers will be published by the GB government and made available on the FBR website.
According to the agreement, traders, in return, have agreed to immediately wind up their protest. Customs will continue to enforce compliance at Sost as it does at other ports.
Dispute resolution
According to the agreement, any disputes arising from the pact will first be resolved through mutual consultation and, if necessary, arbitration under the Arbitration Act, 1940. The federal and GB governments also agreed to work on developing border areas, particularly in Gojal, and to consider measures to boost GB’s exports to China.
Signatories of the agreement on behalf of the federal government were Awais Leghari, Federal Minister for Energy (Power Division); Sana Ullah Khan, Federal Minister for Inter-Provincial Coordination/Adviser to PM on Political and Public Affairs; Amir Muqam, Federal Minister for Kashmir Affairs & SAFRON and Saleem Mandviwalla, Senator and Chairman, Senate Standing Committee on Finance and Revenue
The signatories on behalf of the G-B government were Haji Gulbar Khan, Chief Minister GB; Hafeez-ur-Rehman, former Chief Minister GB; Amjad Azhar Hussain, Advocate and Member GB Assembly; Abbas Ali and Hafiz Ati Ullah, Advocate