The Federal Board of Revenue has clarified that Oil Marketing Companies (OMCs) are not required to pay value addition tax at the import stage on petroleum (POL) products whose prices are regulated by the government. In this connection, the FBR has amended Sales Tax Special Procedures Rules, 2007 through an SRO.135(I)/2012 issued here on Monday.
Sources told Business Recorder that the Board has received queries about the applicability of value addition tax on the import of POL products by OMCs. Secondly, it has also been pointed out by some Model Customs Collectorates that the issue has not been clarified in the relevant Sales Tax Special Procedures Rules, 2007.
In certain cases, some oil marketing companies have also asked the FBR to clarify the issue on the imported POL products. Thus, the FBR has amended the Sales Tax Special Procedures Rules, 2007 to incorporate the provision that "Provided that the value addition tax shall not be charged on the goods as are imported by manufacturer for in-house consumption and the POL products, imported by an Oil Marketing Company for sale in the country, whose prices are regulated under a special pricing arrangement by the Government of Pakistan or by a regulatory authority working under the Government of Pakistan," it added.
According to sources, at present the OMCs are not required to pay value addition tax at the import stage on petroleum products whose prices are regulated by government. However, it has also been duly clarified in the Sales Tax Special Procedures Rules, 2007 to remove ambiguity, if any, among the tax collectors as well as the oil marketing companies. The FBR has not made any change in the taxation regime for the OMCs, but the issue has been clarified for the tax collectors as well as the OMCs, they added.
Following is the text of the SRO.135(I)/2012 issued here on Monday - In exercise of the powers conferred by sub-section (1) of section 71 of the Sales Tax Act, 1990, read with clauses (9) and (46) of section 2, section 3 and 4, sub section (2) of section 6, sub section (3) and (4) of section 7, section 7A, clause (b) of sub section (1) of section 8, clause (a) of sub section (2) of section 13, sub section (2A) and (3) of section 22, proviso to sub section (1), sub sections (3) and (4) of sections 23 and 60 thereof, the Federal Government is pleased to direct that the following further amendment shall be made and shall be deemed to have been so made on 11th June, 2008 in the Sales Tax Special Procedures Rules, 2007, namely:-
In the aforesaid Rules, in rule 58-B, for the proviso, the following shall be substituted namely: "Provided that the value addition tax shall not be charged on the goods as are imported by manufacturer for in-house consumption; and the POL products, imported by an Oil Marketing Company for sale in the country, whose prices are regulated under a special pricing arrangement by the Government of Pakistan or by a regulatory authority working under the Government of Pakistan," the notification added.