Debt commission to also probe tax concessions

FBR told to submit 10-year records of duty waivers granted to traders, industrialists and exporters

ISLAMABAD: The inquiry commission formed by the prime minister to determine the reasons behind the country’s debt pile-up has expanded its sphere of investigation to include the tax concessions granted to traders, industrialists and exporters in the last 10 years.

The commission has directed the Federal Board of Revenue (FBR) to provide it with the records of the concessions in income tax, sales tax, federal excise duty and customs duty given between the tax years 2008 and 2018.

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The commission’s coordinator, Tariq Hamid Butt, has written a letter – a copy of which is available with The Express Tribune – to FBR Chairman Shabbar Zaidi, seeking the records under Section 9 of the Pakistan Commission of Inquiry Act 2017.

Butt also referred to a letter which the commission wrote on July 9 in connection with its probe into the debt pile-up as well as the FBR’s briefing to the inquiry body on July 11.

The commission pointed out that earlier only the FBR had the authority to grant concessions. It asked the FBR to explain when were these powers withdrawn from the board and if the law was amended for this purpose or not.

FBR officials told The Express Tribune that the data is too extensive and they were preparing a detailed report, which will be submitted to the commission by next week.

However, FBR spokesperson Hamid Atiq Sarwar maintained that he had not seen the letter yet. “I can only respond to your queries after reading the letter but what I can say is that the matter of the debt pile-up doesn’t concern the FBR,” he added.

The commission has also sought the records of the past 10 years from private power companies.

The independent power providers (IPPs) have already submitted their one-year data to the commission on July 22.

However, the IPPs have announced that if their issues with the government were not sorted out, they reserved the right under their contract to move the international settlement court.

The commission’s meeting on July 22, presided over by its chairman Hussain Asghar, was attended by incumbent as well as past officials of the National Electric Power Regulatory Authority (Nepra), members of the Power Division and other ministries concerned and representatives of the IPPs.

Khalid Mansoor, a member of IPPs Association, told reporters that being private investors, the companies had nothing to do with the investigation into the debt pile-up.

“We are not sure if summoning investors is in the commission’s terms of reference or not,” he added.

To query, he said IPPs had been told to provide the details of their profits every year and also details of their comparative profit with Nepra’s permitted approved tariff.

“The IPPs are providing nearly 50% of the total electricity in the country and billions of dollars have been invested for this purpose,” he maintained.

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“If the government wants to review the power purchase agreements, it can go ahead with it but IPPs will also have to see if that is applicable or not.”

Mansoor said the IPPs invested in the country during very difficult times and now investor confidence was returning.

“If the policies are changed, investors will lose their confidence. A message will go to foreign investors that old contracts can be reopened and agreements are prone to changes.”