GST elimination in pol: oil refineries are looking for the minister’s intervention

Islamabad: Pakistan oil refineries have asked the Minister of Finance, Senator Muhammad Aurengzeb, to urgently intervene in terms of eliminating the general exemption of sales tax (GST) in oil products.

In a joint letter to the Minister of Finance, the Executive Directors (CEO) of five important refineries, Atock Refinery Limited, Cneryico PK Limited, National Refinery Limited, Pakistan Refinery Limited and the managing director Pak-Arab Refinery Limited, highlighted the significant challenge they currently face by the oil refining industry.

The refineries indicated that the 2024 finance law had altered the state of the sales tax of oil products (including gasoline, high -speed diesel, chest oil and light diesel oil) from a zero to exempt rating. This change has led to the cancellation of taxes to supplies sales, significantly increasing operational and capital costs for local refineries.

Petroleum products in the exemption of sales tax: change of state of zero rating to benefit FBR worth RS20BN

The refineries argue that this change in the Sales Tax Law is severely affecting the financial viability of their planned update projects, infrastructure development and daily operations. They warned that continuing this exemption would lead to drastic profitability erosion and imposes immense financial tension in the industry. “This problem threatens the progress and sustainability of capital intensive projects, thus undermining the objectives of the Brownfield refining update policy approved by the Government in August 2023,” said the CEO of the Refinery.

They also informed the Minister of Finance that, despite continuous efforts in the last seven months, including active coordination with the Ministry of Energy (Petroleum Division), the Petroleum and Gas Regulatory Authority (OGRA) and the Federal Income Board (FBR), the problem remains unresolved.

“The delay in addressing this issue is to jeopardize the survival of the Pakistan oil refining industry and continues to raise significant challenges,” they said, urgently urgently urging the intervention of the Minister of Finance for a quick and friendly resolution.

The oil refining industry has requested an immediate meeting with the Minister of Finance to discuss and solve this critical problem.

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