ISLAMABAD: The Federal Board of Revenue (FBR) is likely to depute an experts' team of tax officials to assist the Power Division for resolving taxation-related issues of 47 Independent Power Producers (IPPs), including payment of pending refunds. Sources told Business Recorder here on Monday that the Power Division had approached FBR for resolving the tax-related issues of IPPs based on the report by the committee for negotiations with the IPPs.

The Power Division has requested FBR to depute a team of tax officials to resolve the tax-related issues of the IPPs.

The proposal is expected to be entertained by the FBR.

It is expected that the tax authorities would assist all the concerned departments for resolving the taxation matters of IPPs, the sources added.

According to the sources, in August 2019, the government has constituted a committee to look into the issues faced by the power sector and to recommend a way forward.

The committee presented its report in March, and in pursuance of that report, the Cabinet constituted another committee to negotiate with IPPs (a negotiation committee).

The negotiation committee after a series of discussions with the IPPs and other stakeholders signed MoUs with 47 IPPs.

The Cabinet approved the subject report of the negotiation committee on September 24th, and gave approval of MOUs on December 1, 2020.

Through these MoUs, the IPPS agreed to a set of relaxations which was expected to result in savings of Rs836 billion to the GoP for the remaining contract period.

On the other hand, the government has agreed to facilitate the IPPs in terms of a set of action.

The following have been agreed in the MoUs and report in respect of taxation issues.

For bagasse projects: The committee shall recommend to the GoP to support to Co-Gen IPPs in resolving income tax exemptions and concessions as per the framework irrespective of how the project has been legally structured, i.e. either through a separate vehicle or as a segment of the existing entity.

Taxation matters highlighted in the report: There are a number of unresolved tax issues and disputes pending between the IPPs and the tax authorities, the GoP may consider resolution of the issues including sales tax apportionment; sales tax on HSD for the period of January 2016 to June 2016; refund of pending sales tax and income tax and minimum tax on capacity payments.

Copyright Business Recorder, 2020