ISLAMABAD: Chairman Federal Board of Revenue (FBR) Asim Ahmad Saturday informed the Senate Standing Committee on Finance that the exemption to the Independent Power Producers (IPPs) has been limited to the lifecycle of the power project or 25 years period.
Chairman FBR Saturday explained to the Senate Standing Committee on Finance about the amendment relating to the profits and gains derived by a taxpayer from an electric power generation project setup in Pakistan on or after July 1, 1988.
Through the Finance Bill 2022, the FBR has added an explanation that for the removal of doubt it is clarified that exemption under this clause shall continue to remain available to those persons to whom exemption under this clause was available on or before June 30, 2021, before insertion of the sixth proviso vide Finance Act, 2021. Provided further that the exemption under this clause shall be available for the lifecycle of the project or 25 years from the date of commencement of commercial production, whichever is earlier, it added.
Under the Finance Bill 2022, a tax expert explained, in respect of tax exemption available to electric power generation projects, the legislature, through Finance Supplementary Act, 2022, specified a condition that such exemption would be available to persons who are issued letter of intent (LOI) by the Federal or Provincial Government by June 30, 2021 and who obtain letter of support (LOS) by June 30, 2023. Such legislative amendment led to the ambiguity/ debate as to whether Projects, where the exemption was not dependent upon LOI and LOS under relevant power policy, stood excluded from the scope of such exemption or not. In this background, through the Finance Bill, it is proposed to be clarified that the above exemption would remain available to persons who were exempt from tax on or before June 30, 2021.
Copyright Business Recorder, 2022