KP Revenue Authority (KPRA) and the Government of Khyber Pakhtunkhwa have issued two separate notifications announcing significant sales tax exemptions for local businesses and the industrial sector in the tribal districts and Malakand Division.
Under the new directives, local service providers are exempt from sales tax until June 30, 2027, while registered industrial establishments enjoy exemptions until June 30, 2028, subject to specific conditions. The tax relief benefits a wide range of industries, including hotels, guest houses, restaurants, property rental, real estate, private construction sectors, hospitals, clinics, local transport, beauty parlors, salons, workshops, car washes, dry cleaning, electrical and electronic repair, plumbing, welding, photography, videography, event management, consultancy, and travel agencies.
To qualify for the tax exemption, service providers must meet the following criteria: the individual must be a genuine resident of the respective area with an address matching the region on their computerized national identity card (CNIC); the business must be physically established within the boundaries of the former FATA or PATA; and the provision of the service must both originate and conclude within these designated regions.
The tax exemption does not apply to telecommunication services, government development projects under the Public Sector Development Programme (PSDP) and Annual Development Programme (ADP), or external brands and franchises operating in the areas.
In a separate notification, registered industrial establishments located within the boundaries of the former FATA and PATA have also been granted an exemption from withholding sales tax on services procured, effective from August 1, 2026, until June 30, 2028.
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