Govt Plan to Unlock $8 Trillion Mining Investment Announced

As part of the National Mineral Policy 2026, the administration is preparing a fiscal incentive package to attract investment in Pakistan's copper and gold reserves, estimated at $8 trillion.

Key points

• The package is projected to be presented to foreign investors at the Pakistan Minerals Investment Forum (PMIF), scheduled for November 12 and 13.
• A major proposal would replace conventional corporate income tax with a 1 percent presumptive tax on export proceeds, alongside a 0.5 percent development surcharge.
• The proposed measures, developed using a model by consultancy Wood Mackenzie, include tax reductions, exemptions and deferred payments aimed at improving the economics of mining projects.
• The incentive proposals were submitted to the Finance Division during the current year's budget process, but a comprehensive program was not introduced at the time.
• Mining projects could receive a 10-year carry-forward period for depreciation allowances after commercial production begins.

Meanwhile, the proposed measures, developed using a model by consultancy Wood Mackenzie, include tax reductions, exemptions and deferred payments aimed at improving the economics of mining projects.

In practice, the package is projected to be presented to foreign investors at the Pakistan Minerals Investment Forum (PMIF), scheduled for November 12 and 13. Nevertheless, the proposals still require approval from the Finance Division. It has been asked by the Petroleum Division to prioritize the package.

Notably, the incentive proposals were submitted to the Finance Division during the current year's budget process, but a comprehensive program was not introduced at the time. Sources remarked the National Mineral Policy document was ready, but the absence of a corresponding fiscal package could limit its ability to attract investment and address challenges facing the sector. Reko Diq Production Could Be Delayed to 2030. Proposed Tax Relief for Mining Projects.

One proposal calls for a 30-year exemption from general sales tax (GST) on imported and locally purchased goods and services applied in mining projects during exploration and development, extending until commercial production begins.

Meanwhile, the administration is additionally considering continuing the exemption after production starts, particularly for export-oriented projects where input sales tax may remain unadjusted. Under the Wood Mackenzie model, withholding tax rates on local goods and services would be reduced to 4 percent and 8 percent, respectively, with payment deferred until mining production begins.

Notably, the package additionally proposes exemptions from import duties on capital goods and project-related equipment during exploration, development and construction. The model identifies customs and import duty relief as an significant component of the proposed fiscal framework. Pakistan Offers Saudi Arabia Tax-Free Oil Storage. Proposal to Replace Corporate Tax With Levy on Export Proceeds.

Notably, a major proposal would replace conventional corporate income tax with a 1 percent presumptive tax on export proceeds, alongside a 0.5 percent development surcharge. The measure is intended to create a simpler and more predictable tax framework for investors.

Wood Mackenzie's analysis identifies corporate income tax treatment as the largest factor influencing an investor's internal rate of return (IRR).

Meanwhile, the proposed package additionally includes a 30-year exemption from super tax for mining projects and a 15-year exemption from withholding tax on dividends distributed after commercial production begins. Inter-corporate dividends within mining project structures may additionally be exempted to prevent tax cascading. Pakistan Buys Record Batteries in 6 Months to Cut Power Bills. Fiscal Stability and Long-Term Investment.

Wood Mackenzie has proposed fiscal stability clauses to protect the tax terms applicable when an exploration concession or agreement is awarded. The framework would broadly follow the stability provisions available to the oil and gas sector.

For context, the consultancy remarked fiscal stability is particularly notable for mining projects since development can take a number of years and investment decisions depend on long-term assumptions regarding taxation and administration revenue.

Meanwhile, the proposed framework additionally seeks to align mining projects, where appropriate, with the special fiscal regime available to the oil and gas sector under the Fifth Schedule of the Income Tax Ordinance, 2001, given similarities in exploration risks, capital requirements and long project timelines. Pakistan Requests More Saudi Investments. Exploration Losses and Depreciation Relief.

For context, the proposed package would allow mining firms to carry forward exploration losses indefinitely, recognizing that exploration costs may be incurred years before production begins and that some exploration projects may fail.

It additionally proposes allowing losses from unsuccessful exploration projects to be adjusted against successful mining projects within the same group, subject to safeguards.

Mining projects could receive a 10-year carry-forward period for depreciation allowances after commercial production begins. The model additionally proposes accelerated depreciation of up to 100 percent, including an rise in the standard depreciation rate from 15 percent to 30 percent. Stay Connected with ProPakistani.

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In short, govt Plan to Unlock $8 Trillion Mining Investment Announced is the central thread here, and readers can expect follow-up reporting as the picture becomes clearer.