Foreign investors urge FBR to resolve Rs108bn tax refund claims

KARACHI: Foreign investors have called on the Federal Board of Revenue (FBR) to address the backlog of tax refund claims, which have surged to Rs108 billion. They believe resolving these claims is crucial for bolstering the confidence of both current and prospective investors in the country.

The outstanding tax refund claims involve income and sales taxes owed to foreign companies operating in Pakistan.

Secretary General of the Overseas Chambers of Commerce & Industry (OCCI) Abdul Aleem Khan highlighted in a letter to FBR Chairman Rashid Mahmood Langria that the backlog of income and sales tax refund claims from overseas investors -- OICCI members -- is growing. “These unresolved refunds are not only putting a strain on the liquidity and cash flow of our member companies but are also conveying a negative signal to the headquarters of multinational corporations (MNCs) operating in Pakistan,” he noted.

As of July 31, 2024, the total pending tax refunds for OICCI members amounted to Rs108 billion, with Rs51 billion related to sales tax and Rs57 billion to income tax. This marks a 15 per cent increase from the Rs94 billion pending as of February 2024, underscoring a concerning upward trend, the letter indicated.

Earlier this year, from March to April 2024, the Board of Investment (BOI) engaged with the FBR Member Inland Revenue to expedite the resolution of these pending refunds, but no significant progress has been made, according to the chamber.

The secretary general of the OICCI asked the FBR chairman to take immediate action to address these valid tax refund claims. “The extended delays are not only impacting the ease of doing business in Pakistan but are also diminishing the country’s competitive position relative to regional counterparts.”

“The prompt resolution of these issues will significantly enhance the confidence of both existing and potential foreign investors,” he concluded in the letter.