ISLAMABAD: The federal cabinet decided that Pakistan Navy(PN) will pay normal taxes and duties on sale of gratis oil in the open market, well-informed sources in FBR told Business Recorder.
These directions were issued at a recent meeting of the Cabinet when the issue of exemption in duties and taxes on oil gifted by Saudi Arabia to Pakistan Navy in lieu of training to its Royal Saudi Naval Forces (RSNF) came under discussion.
The federal cabinet also directed the Federal Board of Revenue (FBR) to amend the Pakistan Customs Tariff so as to replace the words 'Cabinet Division' with the 'Federal Government', which shall be the authority to exempt gifts or donations from import duties/taxes.
Pakistan Navy provides professional/operational training to Royal Saudi Naval Forces officers and CPOs/sailors in Pakistan and conducts on-job-training (OJT) and bilateral exercises on an annual basis.
In reciprocity, RSNF provides gratis fuel to PN which is used for operational purposes and surplus quantity, if any, is sold through normal tendering procedure. Sale proceeds are utilized for maintenance and upgradation of PN training facilities for RSNF and other friendly countries’ navies.
In 2018, on receipt of 10,000 M/Ton fuel from RSNF, Customs authorities asked for a certificate for payment of Customs duties/taxes on account of import of fuel.
Since the fuel is offered on gratis basis by RSNF to PN, therefore, Ministry of Defence has proposed to exempt this import from payment of duties/taxes under PCT Code 9908 of sub-Chapter-II (Import of Relief Goods, Gifts and Samples) of Pakistan Customs Tariff on import of fuel by PN.
FBR’s Customs Wing, Inland Revenue Policy Wing and Revenue Division supported exemption of duties and taxes on import of fuel on gratis basis from RSNF by PN.
During a discussion, the Cabinet Secretary, Sardar Ahmad Nawaz Sukhera, pointed out that although under the provisions of Pakistan Customs Tariff (PCT) duty exemption on gifts or donations could be given by FBR on the recommendation of the Cabinet Division, the matter was brought to the Cabinet since this appeared to be a permanent feature. The Special Assistant to the Prime Minister on Revenue, Dr. Waqar Masood, clarified that the exemption may be confined to duties/taxes at import stage only and the surplus quantity of fuel sold in the open market should be subjected to normal taxes.
Copyright Business Recorder, 2021
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