ISLAMABAD:
The Particular Funding Facilitation Council (SIFC) has known as an pressing assembly to swiftly deal with the challenges being confronted by the oil trade, which has halted work on $6 billion value of refinery improve tasks.
The refineries and oil advertising firms (OMCs) have been dealing with losses for months resulting from gross sales tax exemption. It brought on Rs34 billion loss to them within the final monetary yr – 2024-25.
Although the federal government later got here up with a mechanism to get well the loss, the gross sales tax exemption problem remained unresolved.
Now, the SIFC apex committee has known as an pressing assembly on September 18 to think about the challenges being encountered by the oil trade. Sources advised The Categorical Tribune {that a} sitting, to be held below the chairmanship of SIFC apex committee secretary, would focus on the tax vacation.
Below a reduction mechanism, the federal government had agreed to impose 5% normal gross sales tax (GST) within the Finance Invoice 2025 to pave the best way for clean work on refinery improve tasks. Nonetheless, the federal government failed to meet its dedication.
The trade has voiced concern over the absence of an answer to the gross sales tax exemption on petroleum merchandise within the Finance Invoice, which has jeopardised $6 billion value of funding plans to improve refineries for producing environment-friendly fuels.
The Oil Corporations Advisory Council (OCAC) – an trade foyer – has already warned the federal government that the continuation of gross sales tax break within the finances for FY26 threatens the viability of their companies. It has undermined the arrogance of traders, who could hesitate to offer financing for the deliberate tasks.
Business gamers say it’s not in line with broader targets of the Pakistan Brownfield Oil Refining Coverage 2023. Overseas traders have additionally expressed critical concern because of the gross sales tax exemption, holding again their investments.
The federal government has allowed the oil trade to cost Rs1.87 per litre in an effort to get well the losses attributable to the gross sales tax vacation. It additionally dedicated to resolving the problem by imposing as much as 5% gross sales tax within the FY26 finances. Nonetheless, it didn’t dwell as much as its dedication.
OCAC chairman, in a letter despatched to the Ministry of Power (Petroleum Division), known as for eradicating the gross sales tax exemption whereas conveying his deep concern and robust protest over the continuation of GST vacation within the Finance Invoice.
Whereas the trade acknowledges the federal government’s interim reduction by the restoration of GST affect within the type of inland freight equalisation margin (IFEM), efficient from Could 16, 2025, “this stays a short lived measure with inherent implications,” he mentioned.
The OCAC chairman underlined the necessity for instant withdrawal of the GST exemption and its alternative with a gross sales tax mechanism that enables for full enter tax adjustment. “That is the one sturdy answer that can restore monetary stability, tax neutrality and regulatory readability to the sector, failing which, the funding of $6 billion in Pakistan’s refining sector below the Brownfield Refining Coverage is at critical threat,” he mentioned.
