LTU recovers Rs 450 million income tax from PARCO

The Large Taxpayers Unit of Lahore (LTU) of the Federal Board of Revenue has recovered up to Rs 450 million from the Pak-Arab Refinery Company (PARCO) as part of income tax amount overdue against the company since the tax year 2009. "Another Rs 220 million due under the same head will be adjusted against the refunds which are due against the board as a result of appeal effects of earlier tax years," credible sources at the Large Taxpayers Unit told Business Recorder on Monday.
They also revealed that following an instruction by the unit chief commissioner, a case of assessment of tax liability against the country's leading refinery was reopened two months ago by the Zone-III officers. "As a result of the assessment and tax proceedings, an additional sizable amount of Rs 670 million was deducted by the tax officials in March against the income earned from term deposit receipts in foreign currency. The Pak-Arab Refinery Company initially, out of Rs 670 million, immediately submitted Rs 450 million to the national exchequer, which is a reasonably high recovery," the sources claimed.
They also said refinery committed to pay the remaining Rs 220 million in tax amount after adjustment of the refunds. They went on to say the company never paid income tax on their foreign currency term deposit receipts while it was declaring it as income in their own books, which was also declared to the financial market and annual report.
The sources said the company had claimed that as the company was hardly enchasing and converting their foreign currency term deposit receipts to rupee, thus this amount of investment was exempted from the income tax. But the sources claimed as par law if a company had been using foreign currency term deposit receipts as regular source of the investment, returns on such investments was liable for the income tax likewise other investments instruments. The sources said the company had contested the case of imposition of the income tax on their foreign currency term deposit receipts, but after decisions for an appeal, the latter decided not to contest the case further and submitted Rs 450 million as first instalment to the national kitty. When asked whether such practices had also been detected in accounts of other companies, the sources claimed no such case had been reported in the jurisdiction of the unit in Lahore though other companies, falling under other tax collecting units in the country, might have.