FBR Seeks OMC Feedback on Pakistan Oil Refining Policy 2023

The Federal Board of Revenue (FBR) has officially requested Oil Marketing Companies (OMCs) to provide their responses concerning the Pakistan Oil Refining Policy 2023, which aims to modernize existing refineries.

This request arises from discussions on the policy's financial and operational impacts, specifically its effects on sales tax exemptions for petroleum products under the Sales Tax Act, 1990.

The directive was issued through a letter from the Ministry of Energy (Petroleum Division) to key stakeholders, including Pakistan State Oil (PSO), the Oil Companies Advisory Council (OCAC), and Farkhun Anwar, the focal point for oil refineries.

The FBR is seeking detailed input on several crucial matters, such as:

1. The current status of payment for refundable tax claims at FBR’s field offices.
2. Per-liter operational and capital costs for refineries and OMCs, broken down by provincial and federal levels, along with proposals addressing both retrospective and prospective sales tax issues.
3. Potential revenue loss if the Petroleum Levy (PL) is reduced to counterbalance increases in Inland Freight Equalization Margin (IFEM) and General Sales Tax (GST).
4. Input on a draft bill aimed at transitioning the sales tax exemption system to a taxable regime.

This inquiry is part of a broader review to assess how the policy could influence revenue collection and pricing in the petroleum sector.

Brownfield refineries refer to existing plants that are being upgraded to improve efficiency or capacity, rather than being completely rebuilt.

The issue was first discussed in a meeting held on December 31, 2024, at FBR headquarters and will be revisited in a follow-up meeting on January 3, 2025, with focal points from refineries and OMCs, along with FBR officials.