ISLAMABAD, Nov 21: The Central Board of Revenue (CBR) has opposed blanket tax exemption, incorporated in a draft agreement sent by Overseas Private Investment Corporation (OPIC), on its own operations and its supported investments.

An official source in the CBR told Dawn that the Board had advised the government to stick to the ‘Investment Incentive Treaty’ that exists between Pakistan and the US.

Pakistan and the United States had signed an agreement on June 3, 1959 on avoidance of double taxation between the two countries.

However, the draft agreement, which the OPIC has sent to Pakistan has sought complete exemption from taxes on all operations and activities. The demand, a CBR official said, was one-sided.

The CBR sources said that Pakistan was in no position to give complete tax exemption to OPIC because the same would be demanded by the other countries, which the sources said, the government cannot afford.

Tax experts said that total exemption from taxes, would deprive national exchequer of revenue on investment while allowing repatriation of the entire profits in hard currency specially in investments that may not be export-oriented.

“This would make the playing field totally uneven for the locals who have already invested or want to invest in similar activities”, they remarked.

The OPIC draft also proposes maximum favours or concessions, which Pakistan has not provided to any other country.

Officials said that the same treatment is being sought for all those projects supported by OPIC even if they did not come under the purview of the agreement, which, the source said was in no way based on logic.

Commenting on draft, some experts said the legitimate incentive for foreign investments should be kept intact to ensure that Pakistan’s own financial and economic interests were not undermined.