In two consecutive sectoral notifications, Pakistan's Special Technology Zones Authority (STZA) — a federal body under the Cabinet Division — formally declared two additional Special Technology Zones. The Khanpur Industrial Project (Mumrial, Khanpur, District Haripur, Khyber Pakhtunkhwa; ~197 acres / 199,174 sq ft of existing and proposed infrastructure) was notified on 12 September 2024. The LEOS Technology Zone (Lehtrar Road, Nilore, Islamabad; 19.23 acres / 225,562 sq ft) was notified on 8 November 2024. Both zones operate under the Special Technology Zones Authority Act, 2021 incentive regime, which provides Zone Enterprises and Zone Developers a 10-year exemption from income tax, customs duty on capital-goods imports, and sales tax (under the Customs Act 1969, Income Tax Ordinance 2001 and Sales Tax Act 1990), together with eligibility for Special Forex Accounts under State Bank of Pakistan regulations (no requirement to convert USD inflows to PKR). The umbrella incentive window for the STZA regime runs until 30 June 2035, with each zone enterprise's 10-year clock starting from the date the zone developer certifies commercial operation.

Analyst notesShow

Mechanism

The STZA was established under the Special Technology Zones Authority Act, 2021 as a federal authority sitting directly under the Cabinet Division and the Prime Minister's Office. It operates a three-tier licensing structure:

1. Zone Developers (ZDs) — entities licensed to build and operate STZ-designated land. 2. Zone Enterprises (ZEs) — technology/IT/R&D/semiconductor/electronics-manufacturing firms operating inside an STZ. 3. Notified Zones — specific land parcels formally gazetted by the STZA Board as eligible for the incentive perimeter.

For each Notified Zone, occupant Zone Enterprises and the Zone Developer become eligible for:

10-year income-tax exemption on profits and gains, starting from the certified date of commercial commencement, but capped at 30 June 2035 (whichever is earlier).
Customs-duty exemption on imports of capital goods under the Customs Act 1969 for 10 years.
Sales-tax exemption on capital-goods imports under the Sales Tax Act 1990.
Special Forex Accounts under State Bank of Pakistan regulations — Zone Enterprises and Developers may hold USD revenues without mandatory conversion to PKR, materially mitigating the FX-confiscation risk that has historically deterred foreign technology FDI into Pakistan (especially during recurrent IMF-EFF-era FX-control episodes).

The two notifications filed here are the September and November 2024 zone gazettements:

Khanpur Industrial Project, Haripur, KPK (notified 12 September 2024) — ~197 acres in Mumrial, Khanpur, District Haripur, with 199,174 sq ft of existing and proposed infrastructure. KPK-based, in the Hazara division.
LEOS Technology Zone, Islamabad (notified 8 November 2024) — 19.23 acres (225,562 sq ft) on Lehtrar Road, Nilore, Islamabad Capital Territory.

Downstream implications

GCC and Chinese tech-FDI capture. STZA is a parallel sectoral vehicle to SIFC (2023-06-17-pakistan-sifc-special-investment-facilitation-council) — SIFC handles cross-sector FDI (minerals, defence, agriculture, energy, IT), while STZA is the dedicated IT/semiconductors/electronics carve-out with a much deeper tax-incentive stack. The 10-year holiday plus no-mandatory-USD-conversion combination is competitive against India's PLI scheme on tax terms but inferior on market-access; the addressable channel is therefore GCC and PRC capital looking to onshore software, BPO, and chip-design / electronics-assembly capacity without losing dollar revenues to Pakistan's chronic FX shortages.
Federal-fiscal cost is largely tax-expenditure, not direct outlay. Unlike CHIPS, Korea's K-Chips Act, or India Semicon Mission, STZA is a forgone-revenue instrument rather than a grant programme. Fiscal cost scales with uptake, which is gated by zone certification and ZE licensing throughput — both of which remain the binding constraint.
Reinforces the "single-window" institutional architecture. STZA + SIFC + the Board of Investment together form a tri-vehicle FDI funnel; the 2026 ProPakistani-flagged move to integrate STZA's portal with FBR (tax), SECP (corporate registration) and Pakistan Customs is the downstream administrative plumbing that converts these notifications into routinised on-ramp.

Open questions

How many Zone Enterprises have certified commercial operation under the Khanpur and LEOS zones to date, and what is the Federal Board of Revenue's reported tax-expenditure cost for the wider STZA regime in FY24-25?
Does the Khanpur zone's substantial land area (~197 acres, materially larger than LEOS's 19 acres) signal an electronics-manufacturing / contract-assembly tilt versus LEOS's likely software/R&D campus orientation?
How will the 30-June-2035 sunset interact with the next IMF EFF programme review cycle — has the IMF flagged STZA tax-expenditure as a revenue-erosion concern under the current Stand-By / EFF framework?

Sources

Primary: STZA — Notified Zones (lists all formally declared Special Technology Zones, incl. LEOS 2024-11-08 and Khanpur Industrial Project 2024-09-12) · STZA Exemptions and Incentives Table (PDF) — official statutory enumeration of income-tax / customs / sales-tax exemptions, Special Forex Accounts, and the 30-June-2035 sunset · STZA — Special Technology Zones Authority (official portal, Cabinet Division)

Secondary: Business Recorder — "Authority says Pakistan's new Special Technology Zone will boost tech exports by $350mn" · ProPakistani — "STZA Moves to Link Tech Zone Portal With FBR, SECP and Customs" (downstream administrative integration of the STZ incentive regime, May 2026)

Loading…

Mechanism

For each Notified Zone, occupant Zone Enterprises and the Zone Developer become eligible for:

10-year income-tax exemption on profits and gains, starting from the certified date of commercial commencement, but capped at 30 June 2035 (whichever is earlier).

Customs-duty exemption on imports of capital goods under the Customs Act 1969 for 10 years.

Sales-tax exemption on capital-goods imports under the Sales Tax Act 1990.

Special Forex Accounts under State Bank of Pakistan regulations — Zone Enterprises and Developers may hold USD revenues without mandatory conversion to PKR, materially mitigating the FX-confiscation risk that has historically deterred foreign technology FDI into Pakistan (especially during recurrent IMF-EFF-era FX-control episodes).

The two notifications filed here are the September and November 2024 zone gazettements:

Khanpur Industrial Project, Haripur, KPK (notified 12 September 2024) — ~197 acres in Mumrial, Khanpur, District Haripur, with 199,174 sq ft of existing and proposed infrastructure. KPK-based, in the Hazara division.

LEOS Technology Zone, Islamabad (notified 8 November 2024) — 19.23 acres (225,562 sq ft) on Lehtrar Road, Nilore, Islamabad Capital Territory.

Downstream implications

GCC and Chinese tech-FDI capture. STZA is a parallel sectoral vehicle to SIFC (2023-06-17-pakistan-sifc-special-investment-facilitation-council) — SIFC handles cross-sector FDI (minerals, defence, agriculture, energy, IT), while STZA is the dedicated IT/semiconductors/electronics carve-out with a much deeper tax-incentive stack. The 10-year holiday plus no-mandatory-USD-conversion combination is competitive against India's PLI scheme on tax terms but inferior on market-access; the addressable channel is therefore GCC and PRC capital looking to onshore software, BPO, and chip-design / electronics-assembly capacity without losing dollar revenues to Pakistan's chronic FX shortages.

Federal-fiscal cost is largely tax-expenditure, not direct outlay. Unlike CHIPS, Korea's K-Chips Act, or India Semicon Mission, STZA is a forgone-revenue instrument rather than a grant programme. Fiscal cost scales with uptake, which is gated by zone certification and ZE licensing throughput — both of which remain the binding constraint.

Reinforces the "single-window" institutional architecture. STZA + SIFC + the Board of Investment together form a tri-vehicle FDI funnel; the 2026 ProPakistani-flagged move to integrate STZA's portal with FBR (tax), SECP (corporate registration) and Pakistan Customs is the downstream administrative plumbing that converts these notifications into routinised on-ramp.

Open questions

How many Zone Enterprises have certified commercial operation under the Khanpur and LEOS zones to date, and what is the Federal Board of Revenue's reported tax-expenditure cost for the wider STZA regime in FY24-25?

Does the Khanpur zone's substantial land area (~197 acres, materially larger than LEOS's 19 acres) signal an electronics-manufacturing / contract-assembly tilt versus LEOS's likely software/R&D campus orientation?

How will the 30-June-2035 sunset interact with the next IMF EFF programme review cycle — has the IMF flagged STZA tax-expenditure as a revenue-erosion concern under the current Stand-By / EFF framework?