Refineries Sound Alarm Over Rs18 Billion Tax Blow Under Finance Act 2024

Pakistan’s major oil refineries have officially asked the National Assembly’s Standing Committee on Finance & Revenue to intervene after recent tax policy changes hit their operations hard. According to The News, five major players — Pakistan Refinery Limited, National Refinery Limited, Pak-Arab Refinery Limited, Attock Refinery Limited, and Cnergyico Pakistan Limited — sent a joint letter to the committee’s chairman, raising serious concerns over the impact of the Finance Act 2024.

Under the new law, key petroleum products like petrol, high-speed diesel, kerosene oil, and light diesel oil have been shifted from ‘zero-rated’ to ‘exempt supplies’. This tweak might sound technical, but it’s a big deal — it means refineries can no longer claim input sales tax, which is now jacking up both their daily running costs and long-term investment expenses.

Previously, these fuels were zero-rated, allowing businesses to claim back input tax, which kept things smooth and didn’t mess with prices. But now, the refineries say they’re stuck with higher costs and no way to recoup them — and they’re warning it’s already disrupting operations and threatening $5.5 billion worth of refinery upgrade projects that were supposed to happen under the Brownfield Refining Upgradation Policy approved last August.

The letter warns that if this tax issue isn’t sorted soon, the refining sector could be hit with Rs18 billion in extra financial strain, putting its entire future at risk. The refineries are urging the government to act fast, before the damage becomes irreversible.