ABN AMRO to fund PNSC’s $150m ships deal
ABN AMRO bank has agreed to finance up to 90 per cent of total $150 million purchases of two Aframax oil tankers and one Panamax bulk carrier for the state-controlled Pakistan National Shipping Corporation.
Ships classified as Panamax are of the maximum dimensions that will fit through the locks of the Panama Canal. An Aframax is an oil tanker with capacity between 80,000 dwt and 120,000 dwt. It is mostly employed at harbours that are too small to accommodate VLCCs or very large crude carriers.
Sources of banking industry said on Wednesday in order to lower the cost of financing, Central Board of Revenue (CBR) has approved grant of income tax exemption to PNSC.
The CBR has also tax exempted “profit on debt” earned by ABN AMRO. All over the world, the purchase of all types of ships automatically gets exemption from payment of both direct and indirect taxes.
Since the clause 72-1 of agreement and exemption granted pursuant to it constitute a special incentive measure designed to promote economic development, the “profit on debt” qualifies for tax sparing credit set forth in article 22-4 of the agreement.
The tax exemption under these financing arrangements has been granted under Article 22-4 of the agreement for avoidance of double taxation inked between Pakistan and Netherlands.
Sources said the Finance Division, Ministry of Finance has informed the CBR that the nature of the loan will be commercial and it has approved granting of income tax exemption by also concurrently invoking clause 72-1 of part-1 of the second schedule of the income tax ordinance, 2001.
This implies that “all payments (of the loan) to be made by the PNSC under the loan agreement would be exempted from income tax.”
This special clause of the income tax ordinance was inserted as an incentive for projects of national importance and promoting economic development following industrial investment, expansion and modernization.
Consequent upon approval from the ministry of finance, the income from “profit on debt” of ABN AMRO Bank has been exempted from tax.
ABN AMRO funding will be in foreign currency and it will constitute 90 percent of the total acquisition cost.
Government of Pakistan has not granted its guarantee to the loan, which means that the foreign bank has accepted the commercial viability of the state controlled Shipping Corporation.
By 2010, PNSC has to meet the International Maritime Organization regulations and the purchase of oil tankers is necessary and PNSC to induct to double hull oil tankers.
At present federal government controls, 89.13 percent shareholdings of the PNSC, .
To meet the country’s bulk imports of raw materials such as coke, coal, iron ore and grains, PNSC requires more bulk carriers in its fleet.
PNSC has one bulk carrier and the bulk trade handling is being managed through foreign flag vessels, resulting in outflow of foreign exchange.
The acquisition of these new carriers will enhance the share of PNSC in total sea borne trade of the country.
Ships classified as Panamax are of the maximum dimensions that will fit through the locks of the Panama Canal. An Aframax is an oil tanker with capacity between 80,000 dwt and 120,000 dwt. It is mostly employed at harbours that are too small to accommodate VLCCs or very large crude carriers.
Sources of banking industry said on Wednesday in order to lower the cost of financing, Central Board of Revenue (CBR) has approved grant of income tax exemption to PNSC.
The CBR has also tax exempted “profit on debt” earned by ABN AMRO. All over the world, the purchase of all types of ships automatically gets exemption from payment of both direct and indirect taxes.
Since the clause 72-1 of agreement and exemption granted pursuant to it constitute a special incentive measure designed to promote economic development, the “profit on debt” qualifies for tax sparing credit set forth in article 22-4 of the agreement.
The tax exemption under these financing arrangements has been granted under Article 22-4 of the agreement for avoidance of double taxation inked between Pakistan and Netherlands.
Sources said the Finance Division, Ministry of Finance has informed the CBR that the nature of the loan will be commercial and it has approved granting of income tax exemption by also concurrently invoking clause 72-1 of part-1 of the second schedule of the income tax ordinance, 2001.
This implies that “all payments (of the loan) to be made by the PNSC under the loan agreement would be exempted from income tax.”
This special clause of the income tax ordinance was inserted as an incentive for projects of national importance and promoting economic development following industrial investment, expansion and modernization.
Consequent upon approval from the ministry of finance, the income from “profit on debt” of ABN AMRO Bank has been exempted from tax.
ABN AMRO funding will be in foreign currency and it will constitute 90 percent of the total acquisition cost.
Government of Pakistan has not granted its guarantee to the loan, which means that the foreign bank has accepted the commercial viability of the state controlled Shipping Corporation.
By 2010, PNSC has to meet the International Maritime Organization regulations and the purchase of oil tankers is necessary and PNSC to induct to double hull oil tankers.
At present federal government controls, 89.13 percent shareholdings of the PNSC, .
To meet the country’s bulk imports of raw materials such as coke, coal, iron ore and grains, PNSC requires more bulk carriers in its fleet.
PNSC has one bulk carrier and the bulk trade handling is being managed through foreign flag vessels, resulting in outflow of foreign exchange.
The acquisition of these new carriers will enhance the share of PNSC in total sea borne trade of the country.
