FBR deploys IR officials at oil refineries to check concealment

KARACHI: The Federal Board of Revenue (FBR) has deployed officers of Inland Revenue at oil refineries across the country on suspicions of revenue leakages, sources said on Thursday.

The FBR has posted tax officials at all six oil refineries in the country due to massive shortfall in the revenue collection from this sector, the sources added.

An official at the Large Taxpayers Unit (LTU) Karachi said the decision to initiate stock checking of the refineries was taken at a meeting of Inland Revenue officials with the chairman of the FBR recently.

The LTU Karachi has witnessed steep decline in revenue collection from the petroleum sector. According to the statistics, the revenue collection from this head fell 31 percent to Rs81.76 billion during July–March 2016/17 as compared to Rs118.67 billion during the corresponding period of the last year.

The shortfall is around 41 percent when added the expected revenue growth in this sector. The official said the LTU Karachi has the jurisdiction over three refineries and the chief commissioner has issued instructions this week to monitor the sales of refineries.

The sources said officials have been posted under Section 40B of the Sales Tax Act, 1990, which was invoked on the suspicions of tax fraud. The officials would monitor and obtain data of production and sale of taxable goods of the refineries, the sources added.

The refineries have imported around 5.9 million metric tons of crude oil during July-March 2016/17, which is 38 percent higher than the imports of 4.28MMT during the corresponding period of the last year.

The import of crude oil is free from duty and taxes. However, subsequent supply of finished products by the refineries is subject to sales tax, which the government amends on a monthly basis.

The sources said the FBR conducted analysis of the petroleum sector and found that the impact of falling international oil prices continued in the current fiscal year. However, the sales tax collection from the oil marketing companies (OMCs) was slightly maintained this year. “But the sales of refiners were not up to the mark, leaving suspicions of suppressing the sales,” the LTU official said.

The FBR is eager to recover revenue from this exercise within this year in order to achieve the revenue collection target, the official added. The FBR has been assigned Rs3,621 billion revenue collection target for the current fiscal year and the collection of the first 10 months stood at Rs2,520 billion. The revenue body requires another Rs1,100 billion in the last two months.