The Central Board of Revenue (CBR) will issue an 'advance ruling', under the Income Tax Ordinance 2001, to settle all pending income tax matters pertaining to Pakistan Steel Mills Corporation (PSMC) before its privatisation.
Official sources told Business Recorder on Saturday that the CBR and Pakistan Steel have agreed to work together to settle all tax-related issues, including issuance of 'advance ruling', by December 31, 2005.
The facility of advance ruling was notified in 2003-04 to facilitate foreign investors. However, only a few companies approached for availing the facility of advance ruling. According to its procedure, a non-resident person desiring an advance ruling under section 206A of the Ordinance, 2001 will make an application to the CBR for obtaining the ruling. The tax officials would examine their cases for issuance of advance ruling through procedure notified through Income Tax Rules 2002.
Officials said that recently tax officials had pointed out that the transfer of non-core assets and investments of PS can potentially have corporate tax implications. The transfer of these assets and investment at less than their fair value poses the risk that the Central Board of Revenue (CBR) may tax PS on 'deemed income' basis.
It has been agreed that representatives of CBR would work with PSMC to settle all past tax issues through CBR committees on such resolution. Moreover, CBR will also issue an 'advance ruling' confirming that the transfer of non-core assets and investment by the PSMC to the government will not have any adverse implications for Pakistan Steel after its privatisation.
Recently, the inter-ministerial steering committee on privatisation of PS met to resolve critical issues ahead of the sale of the steel mills in a transparent and smooth manner. The meeting was presided by Minister for Privatisation Dr Abdul Hafeez Sheikh and Industries Minister Jehangir Khan Tareen reaffirmed government's commitment to privatise PSMC on fast track and directed the committee to settle all issues within the stipulated period.
The meeting was also attended by Tahsin Khan Iqbal Secretary, Privatisation Commission, Chairman PSMC and Representatives of Ministry of Industries, Production & Special initiatives, Ministry of Finance, Ministry of Law and Human Rights, CBR, SECP, Sindh Government, Privatisation Commission and Citigroup the Financial Advisor for privatisation of PSMC.