LAHORE: Oil Marketing Association of Pakistan on Sunday said imposition of the Sindh Cess Tax increases the difficulties and hardships faced by OMCs.
In a letter written to chairman Oil and Gas Regulatory Authority by Chairman OMAP Tariq Wazir Ali said in Pakistan, the Oil and Gas Regulatory Authority (OGRA) plays a crucial role in regulating oil prices. However, the recent imposition of the Sindh Cess Tax has not been factored into the existing price mechanism formula. Consequently, this tax is significantly eroding the margins of Oil Marketing Companies (OMCs). The burden of this tax is exacerbating the challenges faced by OMCs, who are already grappling with survival in a highly competitive industry.
OMAP request OGRA to call an emergent meeting in order to solve this issue. “We kindly request your prompt arrangement of an urgent meeting with OMAP to address this issue as a matter of utmost priority”, Letter said. As per the letter OMAP aims to draw your esteemed attention to the pressing concerns confronting all Oil Marketing Companies subsequent to the introduction of the WEBOC system for Customs clearance.
In accordance with the Sindh Government Infrastructure Cess Tax, a levy of 1.25% will be imposed on all imports made through Karachi Port. This matter holds significant magnitude and carries the potential to directly impact the profit margins of OMCs by nearly 40% in the event that the Cess Tax is enforced. It is worth noting that all OMCs have obtained stay orders from both the Sindh High Court and the Supreme Court of Pakistan, which mandate that the release of products is contingent upon the provision of Bank Guarantees equal to the amount of Cess Tax. Furthermore, the requirement to furnish bank guarantees for the tax will also pose challenges for the OMCs as it will affect their working capital.
Copyright Business Recorder, 2023
Comments
Comments are closed.