FBR and Philip Morris Pakistan Still Waiting on Rs. 1.6 Billion Tax Recovery Case

The Federal Board of Revenue (FBR) is waiting for a judgment of the appellate tribunal for the tax recovery of around Rs. 1.6 billion from Philip Morris (Pakistan) Limited tobacco company, a national daily reported quoting sources in the Large Taxpayers Office Karachi. A case of alleged sales tax evasion and non-payment of federal excise duty, amounting to Rs. 2 billion, is pending at the tribunal against Philip Morris (Pakistan) Limited for the last two years. The tax office issued two orders against Philip Morris (Pakistan) Limited on July 13, 2017, and one order dated October 16, 2017, and demanded an aggregate amount of Rs. 1.76 billion for alleged evasion of FED and sales tax along with penalties. FBR has recovered nearly Rs. 400 million out of the Rs. 2 billion, the news report said. No progress has been made on the case since the tribunal summoned the officer who drafted the recovery notice, but that officer has been transferred to another department on deputation. On the other hand, the company has contested the alleged evasion claim of the tax department. Philip Morris (Pakistan) filed appeals before the Commissioner Inland Revenue (Appeals), who upheld the demand through an order on January 30, 2019. The hearings fixed on January 22, 2020, March 4, 2020, April 2, 2020, and September 10, 2020, were adjourned and the next date of hearing is yet to be fixed, according to the company. According to a company’s document, the company also obtained an interim injunction last year to prevent the authorities from taking coercive action by paying 15 percent of the federal excise duty demand and 100 percent of the sales tax demand, amounting to Rs. 241.867 million and Rs. 152.561 million, respectively.