FBR grants tax concessions on energy supply to manufacturers

KARACHI: The Federal Board of Revenue (FBR) has allowed concessionary tax rates on supply of electricity and gas to the manufacturers that are on the current active taxpayers list (ATL).

In an office order, the FBR said the concessionary tax rate on supply of electricity and gas will be available to 4,084 taxpayers who were availing facility of zero-rating of sales tax.

Earlier this month, the Economic Coordination Committee (ECC) of the cabinet approved tax concessions on supply

of electricity and gas to industries in order to reduce production cost and make exports compatible in the international markets.

The FBR said it has no objection on concessionary tax rate on supply of electricity / gas to 4,084 taxpayers, who are availing zero-rating of sales tax on supply of the utilities under a rescinded statutory regulatory order (SRO 1125(I)/2011) and their particulars existed in various sales tax general orders issued in this regard till June 30 last year. The taxpayers should also appear in current ATL, according to the FBR.

The FBR said it publishes a monthly ATL list with distribution companies / gas companies.

“Therefore, the utility companies should ensure that concessionary utility tariff is accorded to manufacturers/ taxpayers that appear on the ATL while generating monthly electricity / gas bills,” it said.

The ministry of commerce submitted a summary to the ECC to re-consider the earlier decision taken by the committee in October regarding procedure for registration under concessionary regime of electricity, re-gasified liquefied natural gas and gas in export-oriented sectors (erstwhile zero-rated sectors).

After due deliberation, the finance minister directed the officials to maintain status quo with a condition that FBR might register new manufacturers or exporters in five export-oriented sectors (erstwhile

five zero-rated sectors) in coordination with the ministry of commerce till June 2021.

The government abolished the sales tax zero-rated facility from July 1, 2019 and normal rate of 17 percent was imposed. Opposing the move, business leaders said withdrawal of sales tax zero rating for key five export-oriented sectors – value-added textiles, leather, carpet, surgical instruments and sports goods – would adversely impact the country’s exports, which remain stuck below $25 billion.

The five sectors contribute 70 percent in exports of Pakistan and contribute significantly in earning foreign exchange and providing employment to skilled and unskilled labour force.