The ECO Trade and Development Bank (ETDB) has approached the Federal Board of Revenue (FBR) for tax exemption certificate against withholding tax and sales tax presently paid by the bank to different authorities in Pakistan. Sources told Business Recorder here on Wednesday that the ECO ETDB has written a letter to the tax authorities.
According to the bank, since the ETDB is a multilateral development bank, duly registered with the United Nations, it is recognized as international independent entry of which the legal status is similar to other multilateral development banks such as the Asian Development Bank, the Islamic Development Bank and others.
The ECO Bank started its operations in Pakistan under the "Host Country Agre-ement" dated July 8, 2009 formed between the bank and the government of Pakistan. As per article IX of the agreement, the bank is exempt from all present and future direct and indirect taxation and duties, including but not limited to sales tax income tax, withholding tax, stamp duties, be it of a local or the governmental nature.
In line with the "Host Country Agreement," the FBR notified tax exemption to the Bank vide SRO 810(I)/2009 dated the 19th September, 2009 and the bank has been included in the list of tax exempted institutions at (XXIV) in clause 66, Part 1, Second Schedule, to Income Tax Ordinance, 2001.
However, various types of taxes such as withholding tax and sales tax have been paid by ECO Bank to different authorities in Pakistan, while executing transactions that fall under the scope of official activities of the bank. Those authorities demand tax exemption certificate for allowing exemption from tax deduction. It is, therefore, requested to kindly arrange for provision of tax exemption certificate" to the ECO Trade and Development Bank, the bank added.