The government is preparing a wide fiscal incentive package to draw foreign capital into Pakistan mining, focused on copper and gold reserves estimated at $8 trillion, under the proposed National Mineral Policy 2026. The draft package—built around a model by consultancy Wood Mackenzie—combines tax cuts, exemptions and deferred payments meant to make large projects more bankable. Presentation to international investors is planned for the Pakistan Minerals Investment Forum (PMIF) on November 12 and 13, but only if the Finance Division clears the measures first.
What the draft package would offer
One major plank is a 30-year exemption from general sales tax (GST, the sales tax charged on goods and services) on imported and locally bought inputs used in mining during exploration and development, lasting until commercial production starts. Officials are also weighing whether that GST relief should continue after production begins for export-focused projects where input tax often remains stuck and cannot be adjusted. Under the Wood Mackenzie model, withholding tax on local goods and services would fall to 4 percent and 8 percent respectively, with payment deferred until production begins.
The framework also points to exemptions from import duties on capital goods and project machinery through exploration, development and construction. A further headline idea would replace ordinary corporate income tax with a 1 percent presumptive tax on export proceeds, plus a 0.5 percent development surcharge, aiming for a simpler, more predictable bill for investors. Wood Mackenzie’s analysis treats how corporate income tax is set as the single largest driver of an investor’s internal rate of return (IRR)—a measure of how profitable a project looks over time.
Stability, losses and depreciation
Alongside rate cuts, the draft seeks a 30-year exemption from super tax for mining projects and a 15-year exemption from withholding tax on dividends paid after commercial production starts. Inter-company dividends inside mining project structures may also be spared to avoid tax stacking on the same profit. Wood Mackenzie has urged fiscal stability clauses—rules that lock in the tax terms applicable when an exploration concession or agreement is awarded—broadly in line with protections already used in oil and gas. The consultancy argues such certainty matters because mines take years to develop and investment decisions rest on long-term tax assumptions.
Where suitable, the package would also align mining with the special fiscal regime available to oil and gas under the Fifth Schedule of the Income Tax Ordinance, 2001, citing similar exploration risk, heavy capital needs and long timelines. Exploration losses could be carried forward indefinitely, and losses from failed exploration might be set against successful mines in the same group, subject to safeguards. After production starts, depreciation allowances could be carried forward for 10 years, with accelerated write-offs of up to 100 percent and a rise in the standard depreciation rate from 15 percent to 30 percent.
Approval still pending
The Petroleum Division has asked the Finance Division to prioritise the package. Incentive ideas were submitted during this year’s budget process, but a full programme was not rolled out then. Sources have said the National Mineral Policy text itself was ready, yet without a matching fiscal package its power to attract capital and ease sector bottlenecks would be limited. Until Finance signs off, the November forum pitch remains conditional.
Timeline: what has happened so far
- This year’s budget process: Mining incentive proposals went to the Finance Division, but a comprehensive fiscal programme was not introduced.
- Policy drafting: Sources said the National Mineral Policy document was ready while the matching tax package lagged.
- Petroleum Division follow-up: The division asked Finance to prioritise clearance of the incentive package.
- November 12–13: The package is expected to be shown to foreign investors at the Pakistan Minerals Investment Forum, subject to Finance Division approval.
- National Mineral Policy 2026: The incentives are framed as part of this proposed policy covering copper and gold investment.
Aasan alfaaz mein
Pakistan ki hukumat copper aur gold ki kan-kani ke liye bade tax faiday tayyar kar rahi hai. In reserves ki qeemat lagbhag $8 trillion batayi jaati hai. Abhi Finance Division ki manzoori zaroori hai, phir 12–13 November ke investor forum par yeh package dikhaya ja sakta hai. Agar investment aati hai to yeh faiday seedha aam bills nahi badlenge, lekin waqt ke sath jobs aur export income ka imkan ban sakta hai.
