ISLAMABAD: The Chief Executive of Azad Pattan Power Private Limited (APPL) has approached top ministers against alleged threat to illegally attach company’s bank accounts by Commissioner Inland Revenue AJ&K.
In a letter to Minister for Planning, Development and Special Initiatives, Ahsan Iqbal, Minister for Power, Khurram Dastgir Khan and other concerned authorities, the company CEO, Li Xiaotao said, 700 MW Azad Pattan hydropower project, a key CPEC energy project located on River Jhelum in AJ&K was issued Letter of Support (LoS) by GoP on June 30, 20 1 6 in a ceremony witnessed by Khawaja Asif, the then Minister for Power.
According to the CEO, most of the key finance documents for this $1.54 billion hydropower project, have been executed and as mandatory in project financing, the company has engaged legal, technical and financial consultants, for and on behalf of the lenders, to carry out the project due diligence.
While making the payments, no withholding tax was deducted, as the right to tax such income, where services are provided exclusively in China by non-Pakistan resident entities, vests exclusively with China under Article 13(l) of the treaty for avoidance of double taxation, which overrides the provisions of the ITO 2001.
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“Unfortunately, bypassing the sovereign commitment of Pakistan, the Commissioner Inland Revenue AJ&K has ignored the Treaty and levied tax under the ITO 2001, which the Treaty specifically exempts. Despite all arguments and in full defiance of the law the Commissioner issued an Order for tax years 2021 and 2022, demanding Rs. 19.94 million; and now the Commissioner is threatening the Company to attach its bank accounts if the amount is not paid, in furtherance of his 2021-22 tax targets,” said the CEO Azad Pattan, in his letter.
He maintained that such an approach and attitude seriously affect investor confidence and bilateral relations between two sovereign states - in this case China and Pakistan.
“We request the authorities to order resolution of this matter strictly in accordance with the law to avoid recovery of unjust and illegitimate tax demand of Rs. 19.94 million through coercive measures by AJ&K tax department,” he said adding “Hydropower is a key renewable energy technology which is vital for Pakistan to save vast quantities of imported oil and gas and provide close to free electricity to the masses. We look forward to your kind intervention and support for this CPEC project of national significance and shall remain at your service to provide any further information or clarification that may be required.”
Copyright Business Recorder, 2022
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