The tax authority has taken this measure after dismissal of the appeals filed by Hubco – the country’s largest independent power producer – in Islamabad High Court against a tax on issuance of shares against the project development cost.
Hubco has already filed appeals before the Supreme Court against the decision and has also requested for abstaining FBR from taking any coercive action until the matter is adjudicated by the court, according to a notice sent to the Karachi Stock Exchange on Tuesday.
The company is liable to pay Rs3 billion in the shape of taxes and penalties for settling this issue as per news reports.
“However, it will be liable to pay Rs1.6 billion, incase the Supreme Court decides against Hubco as per our discussion with the company and mentioned in the company accounts,” said BMA Capital analyst Nurali Barkatali. This translates into a one-time hit of Rs1.38 per share.
This situation raises questions over ability of the power producer to continue its operations and to make payments to its fuel supplier Pakistan State Oil.
“We are of the opinion that plant operations will not suffer as fuel supply to senior plant in south is guaranteed by Government of Pakistan under power policy of 1994,” added Barkatali.
Published in The Express Tribune, April 4th, 2012.
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Another Shameful Decision taken by the so called Tax friendly, pseudo-democratic, investment friendly Government. I wonder who will invest in Pakistan after such steps are taken by the tax regulator. Wonder weather same things happens with people having good political connections.