• Download the Constitution of Pakistan
  • Advertise
WRITE FOR US
Economy.pk
No Result
View All Result
  • Economy
  • Politics
  • Technology
  • Education
  • Life & Style
  • Health
  • World
  • Videos
  • Economy
  • Politics
  • Technology
  • Education
  • Life & Style
  • Health
  • World
  • Videos
No Result
View All Result
Economy.pk
No Result
View All Result
Home Life & Style

Existing Oil Refineries Removed from Tax Exemption

by News Desk
October 14, 2021
in Economy, Main
Reading Time: 3 mins read
Existing Oil Refineries Removed from Tax Exemption
Share on FacebookShare on Twitter

10 Year Tax Exemption has been abolished on Existing oil refineries, 10% custom duty on petrol and diesel will be collected to upgrade existing oil refineries, while new oil refineries is included in 20 year tax holiday.

Following negotiations with the refining industry, the petroleum division has wiped out 10-year tax exemption protection, reduced government’s contribution to finance upgrades of existing oil refineries and enhanced compliance requirements.

The Cabinet Committee on Energy (CCoE) led by Planning Minister Asad Umar had earlier approved an incentives package for modern refineries that also included 20-year tax holiday but had refused to allow such protections to existing refineries for refurbishment.

Sources said the petroleum division has now removed both objections raised by the CCoE regarding incentives to old refineries currently operating in the country. The 10-year tax holiday has been abolished and upfront government contribution has been reduced to 30% in the final draft as against 40% rejected by the CCoE.

This contribution has to be generated through 10pc customs duty on petrol and diesel and to be kept in the special reserve account to finance upgrades of existing refineries and have already been covered in the finance bill for 2021-22. Under the revised policy, there will be no guarantee of rate of return for existing refineries provided by the regulator or the government of Pakistan and refineries shall be allowed to open and maintain foreign currency accounts. They shall be allowed to retain a certain portion of export proceeds in a foreign currency, if any, to meet operational requirements.

A special account for upgradation/expansion will be maintained by each refinery in NBP

“There shall be a tariff protection in the form of 10% import duty on Motor Gasoline and Diesel of all grades as well as imports of any other white product used for fuel for any kind of motor or engine, effective from January 1, 2022 to December 31, 2027,” the policy said.

A ‘Special Reserve Account’ for upgradation/modernisation/expansion will be maintained by each refinery in a separate bank account to be opened in National Bank of Pakistan. Any incremental revenue (net of taxes) earned by the refineries based on the revised tariff structure (over and above the existing pricing mechanism for refineries), will be transferred to the ‘Special Reserve Account’.

This will appear separately in company’s books of accounts, which shall be exclusively utilised for upgradation, modernisation or expansion projects and will not be utilised for distribution of dividends or adjustment of losses or any other general corporate purposes of the existing refineries.

The refineries will be entitled to withdraw from the ‘Special Reserve Account’ once the EPC contract for the respective upgradation, modernisation or expansion project has been awarded. The drawdown from ‘Special Reserve Account’ would be utilised on proportionate basis.

These funds would be used exclusively for the upgradation, modernisation and expansion and petrochemical projects shall constitute no more than 30% (net of taxes) of the total project cost, while the remaining 70pc will be funded by the refineries on their own balance sheets in the form of corporate debt or sponsors equity or both. Balance in the ‘Special Reserve Account’ exceeding 30% of total cost of the project, verified by the independent auditors (from big four audit firms), shall be settled through a mechanism to be devised by the Oil and Gas Regulatory Authority.

To be eligible for these fiscal incentives for upgrade, modernisation or expansion, the existing refinery would have to commit upgrade or expansion plan with the government no later than December 31, 2021 and provide an undertaking to the petroleum division regarding proposed timeline, potential configurations, the tentative product slate after upgradation (ensuring production of EuroV Mogas and Diesel), the size, as well as all other relevant information. Upon receipt of this undertaking, the petroleum division shall provide a ‘waiver’ for the refinery to continue marketing its products, until the agreed completion date of the upgradation but not later than December 31 2026, from the fuel specifications to be notified by the petroleum division by October 31, 2021.

Refineries that do not provide such undertaking, and do not have a ‘waiver’, shall not be allowed to sell their products in Pakistan if not meeting the notified fuels specifications, after June 30, 2022.

Tags: Existing Oil RefineriesNew Oil RefineriesTax Exemptions
News Desk

News Desk

Related Posts

Petrol may go down in Pakistan from Oct 1

Petrol may go down in Pakistan from Oct 1

Petroleum prices in Pakistan are expected to decrease as the Pakistani rupee continues to strengthen against the US dollar, interim...

Pakistan's Caretaker PM Raises Concerns over Indian Hindutva Expansionist Designs

Pakistan’s Caretaker PM Raises Concerns over Indian Hindutva Expansionist Designs

Caretaker Prime Minister Anwaarul Haq Kakar has drawn attention to what he describes as the "extremely dangerous" expansionist designs of...

PCB Announced World CupSquad 2023, Here’s the New List

Hasan Ali replaces Naseem Shah in Pakistan’s World Cup 2023 squad

The Pakistan Cricket Board (PCB) has finally revealed the 15-member squad for the next ICC World Cup 2023 in a...

Elections to be held in last week of January, says ECP

Elections to be held in last week of January, says ECP

The Election Commission of Pakistan (ECP) declared on Thursday that general elections would be held in the last week of...

Intraday Update: Rupee Continues to strengthen Against the US Dollar

Intraday Update: Rupee Continues to strengthen Against the US Dollar

The Pakistani rupee kept on rising against the US dollar on Thursday, gaining 0.40% during the first hours of trade...

IMF wants Pakistan to tax the rich to protect poor

IMF wants Pakistan to tax the rich to protect poor

The International Monetary Fund (IMF) encouraged Pakistan on Wednesday to tax the wealthiest in order to provide relief to the...

Next Post
Pakistan's Social Media Rules Ammeded and Released

Pakistan's Social Media Rules Ammeded and Released

Please login to join discussion

Recent Posts

  • Gautam Gambhir expects Babar Azam to shine in World Cup
  • IT Ministry Started Preparations For the Launch of 5G Services
  • Zaka Ashraf included in PPP’s parliamentary board for general elections
  • Petrol may go down in Pakistan from Oct 1
  • World Bank report reveals Pakistan’s poverty rate inrease to 39.4%

Advertisement

Twitter

Economy.pk

Economy.pk is a source of economic, political, business, finance, health and sports updates.

Categories

  • Economy
  • Politics
  • Technology
  • Education
  • Life & Style
  • Health
  • World
  • Videos

Privacy & Legal

  • Privacy Policy
  • Cookies

Social Media

  • Facebook
  • Instagram
  • Twitter
  • Linkedin
  • About
  • Advertise
  • Contact

© 2023 Economy.pk

No Result
View All Result
  • VIDEOS
  • World
    • Europe
    • Americas
    • Asia
    • Oceania
    • Africa
    • Middle East
  • Finance
  • Politics
  • Business
    • Economy
    • Finance
    • Entrepreneurship
    • Real Estate
  • Technology
    • Cyber Security
    • Mobiles
    • Social Media
  • Education
  • Sports
  • Life & Style
    • Personalities
    • Art
    • Culture
    • History
    • Entertainment
    • Fashion
    • Food
    • Health
      • Environment
      • Fitness
  • Sponsored

© 2023 Economy.pk