LAHORE: The unpaid income tax and sales tax refund claims of some 74 companies owned fully or partially by foreign investors have increased by a whopping 38.7 per cent in last one year from Rs47 billion in February 2018 to Rs64.8bn.
According to a letter written by the Overseas Investors Chamber of Commerce and Industry (OICCI) to the Federal Board of Revenue (FBR), the outstanding income tax refunds of its member firms stood at Rs42bn and sales tax claims at Rs22.8bn.
The list of companies and their outstanding refund claims show that the government owes Pakistan Telecommunication Company a total of Rs9.9 billion, Engro Fertilisers Rs6.5bn and Standard Chartered Bank Rs5.2bn. Tetra Pak is owed Rs4.9bn, Engro Foods Rs4.7bn and Nestle Rs4.6bn.
The unpaid refunds of the Hub Power Company stand at Rs2.3bn and Archroma Pakistan Rs2.2bn. Seven firms are owed between Rs1bn and Rs2bn while remaining 59 enterprises have outstanding refunds of less than a billion rupees each stuck with the FBR.
In the last one year, according to the OICCI letter, the government has released a meagre amount of Rs7.3bn to exporters. “A similar view and action should be taken to facilitate the largest bloc of taxpayers represented by the OICCI to attract foreign direct investment,” the letter demands.
It said the OICCI companies had collectively invested $2.7bn (in new projects, capacity expansion and modernisation) in 2017 and the early payment of their tax refunds will help them implement their future investment plans.
A senior executive at one of the affected companies claimed that the accumulation of their income and sales tax refunds was a major reason behind falling foreign direct investment in the recent years in addition to other such factors as poor country perception of Pakistan, travel advisories, higher cost of doing business, low ranking of Pakistan on the Ease of Doing Business Index, and complicated tax regime and administration.
He said the whimsical action taken recently by the highest court against some foreign companies operating in Pakistan and negative publicity given to those cases was further discouraging foreign investors from bringing their capital to this country.
Published in Dawn, March 22nd, 2019