Generated from the document text · 19 Aug 2026
The Special Technology Zones Authority Act 2021 establishes STZA as a federal body corporate to develop Pakistan's technology ecosystem through designated zones offering 10-year comprehensive tax exemption packages. The Act grants zone developers and zone enterprises exemptions from income tax, sales tax, customs duty on capital goods, and property tax, along with foreign exchange facilitation. The Authority operates under a Board chaired by the Prime Minister and provides a One Window Facility for licensing, visa facilitation, and regulatory approvals. The Act overrides other laws, includes protection against premature withdrawal of incentives, and establishes an Alternate Dispute Resolution mechanism with a dedicated Appellate Tribunal.
Key questions answered
What specific tax exemptions and incentives are available under the Act and for how long?
Under Sections 20 and 21, zone developers receive incentives from the Development Agreement date, while zone enterprises receive incentives from license issuance, both for a period of ten years. These include: exemption from all taxes under the Income Tax Ordinance 2001 (including income tax, turnover tax, withholding tax, capital gains tax, and dividend withholding tax); exemption from sales tax under the Sales Tax Act 1990; exemption from customs duty on import of all Capital Goods including materials, plant, machinery, hardware, equipment, software, devices, instruments, accessories, and attachments; exemption from property tax; and tax exemption on dividend income and capital gains for venture capital funds investing in zones.
How does a company obtain a zone enterprise license and what criteria apply?
Section 14 states that the Authority shall prescribe criteria and procedures for licensing of zone enterprises and zone developers in the regulations. Section 13 indicates that the Authority shall prescribe criteria for approval of zones in the rules. The Approvals Committee under Section 12 has the function to consider and approve zone developers and zone enterprises applications and agreements. Companies must apply to the Authority, and the Approvals Committee evaluates applications against prescribed criteria.
What services does the One Window Facility provide and how does it facilitate business operations?
Section 4(m) authorizes the Authority to set up a One Window Facility to facilitate zone developers and zone enterprises. Section 5(o) specifies that the Authority acts as a One Window Facility for investors, zone developers, zone enterprises and other stakeholders, dealing with other relevant government entities on their behalf. Section 5(p) adds that the Authority may issue letters of recommendation or invitation letters deemed sufficient for issuance of business and work permits or visas by relevant authorities.
What dispute resolution mechanisms are available under the Act?
Section 22 establishes a legally binding Alternate Dispute Resolution mechanism prescribed by the Authority for settlement of disputes among and between the Authority, zone developers, and zone enterprises. All agreements must be governed by this mechanism. Section 23 grants exclusive jurisdiction to the Special Technology Zones Appellate Tribunal for specified disputes. Under Section 24, appeals to the Tribunal must be filed within 30 days, and the Tribunal must decide within three months. Section 25 allows further appeal to the Supreme Court within 60 days under Supreme Court rules.
Can zone enterprises employ foreign key personnel and what provisions exist for their visa and work permits?
Section 35 explicitly addresses this by stating that notwithstanding anything in any other law, the Authority may issue special rules for employment by zone developers and zone enterprises of key managerial and technical persons who are not citizens of Pakistan. These special rules relate to terms and conditions of their contracts as well as issuance of visas, temporary residence permits, and temporary work permits for such key persons and their dependents. This provision enables companies to bring in specialized foreign talent essential for technology development.
Questions are queued and answered against the document's extracted text. Answers appear below once processed.
Which sections grant tax exemptions under the Act?
Answered
## Tax Exemptions Under the STZA Act 2021
Tax exemptions are primarily granted in two sections:
**Section 20 – Exemptions and Incentives for the Authority and Zone Developers:**
From the date of signing the Development Agreement, for a period of ten years:
- **(a)** Exemption from all taxes under the Income Tax Ordinance, 2001 (profits and gains, income tax, turnover tax, withholding tax, capital gains tax, dividend income tax, and withholding tax on dividends)
- **(b)** Exemption from sales tax under the Sales Tax Act, 1990
- **(c)** Exemption from Customs Duty under the Customs Act 1969 on import of all Capital Goods (materials, plant, machinery, hardware, equipment, software, etc.)
- **(d)** Exemption from property tax
- **(e)** Exemption on dividend income and capital gains of venture capital funds (local or foreign) derived from investments in zone developers
- **(f)** Permission for foreign currency accounts and repatriation
**Section 21 – Exemptions and Incentives for Zone Enterprises:**
From the date of issuance of license, for a period of ten years:
- **(a)** Exemption from all taxes under the Income Tax Ordinance, 2001 (same scope as above)
- **(b)** Exemption from sales tax under the Sales Tax Act, 1990
- **(c)** Exemption from Customs Duty under the Customs Act 1969 on import of Capital Goods
**Section 19(2)** provides that these incentives "shall not be withdrawn or modified or altered prematurely and retrospectively."
**Section 22(1)** confirms that zone developers and zone enterprises are entitled to incentives outlined in Sections 20 and 21 upon execution of relevant agreements.
19 Aug 2026 13:47 · ask #2
How long is the tax exemption period for STZ companies?
Answered
**Ten years** from the date of issuance of license.
Section 21 of the STZA Act 2021 states that the incentives for zone enterprises apply "from the date of issuance of license for a period of ten years." These include:
- Income tax exemption (including profits, gains, turnover tax, withholding tax, capital gains, and dividend income)
- Sales tax exemption
- Customs duty exemption on capital goods imports
- Property tax exemption
- Tax exemption on dividend income and capital gains for venture capital funds
- Foreign currency account and repatriation permissions
**Note:** Zone developers receive the same ten-year exemption period, but calculated from the date of signing the Development Agreement (Section 20).
19 Aug 2026 13:45 · ask #1
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