All taxes apply on test oil export to NATO

The first cargo appears to be a litmus test to check response on taxation.

ISLAMABAD:

After a year-long hiatus, the first trucks carrying fuel supplies for US-led Nato forces in Afghanistan crossed the borders in what appeared to be a litmus test to check the much argued taxation by Islamabad on supply trucks.

US authorities have been relentlessly urging authorities in Pakistan to withdraw the decision of imposing all taxes on export of petroleum products to Afghanistan which Pakistani consumers pay. However, sources said, this demand has not been met.

“Pakistan State Oil (PSO) has sent a test consignment of oil export to Afghanistan for Nato forces with all taxes on petroleum products applicable in Pakistan,” sources said, adding that US authorities have been arguing that imposition of taxes was meant for export of oil to meet commercial needs in Kabul and not for Nato.

The oil supply to Afghanistan was halted due to tensions between Washington and Islamabad in the aftermath of the Nato airstrike on Salalah check post that killed 24 Pakistani soldiers on November 26, 2011.

The closing became a major sore point between the two countries, which have a history of acrimony despite being partners for more than a decade in the effort to curb terrorism.

In December 2011, Economic Coordination Committee (ECC) banned the export of high-speed diesel (HSD) and petrol produced by domestic oil refineries to Afghanistan.

ECC also decided that Afghanistan would have to pay all applicable taxes including Petroleum Levy and General Sales Tax (GST) on these petroleum products.

Pakistan has been exporting subsidised petroleum products, including HSD and jet fuel to Nato forces.

As per the new policy, Afghanistan is now bound to pay all applicable taxes on petroleum products being consumed in Pakistan if it imports these products following the resumption of Nato supplies,” official added.

Meanwhile, authorities in Kabul have been pushing for the duty free import of oil, a request denied by the ministry of petroleum and natural resources.

Similarly, the oil marketing companies (OMCs), a cartel of oil refineries, allegedly involved in dumping petroleum products in Khyber-Pakhtunkhwa (KP) have also been calling to lift the ban on export of locally produced petroleum products but this demand has also been rejected by the government.

According to official figures, Pakistan has been exporting 150,000 tonnes of high-speed diesel, 100,000 tonnes of petrol to Afghanistan since 2002-03 at subsidised rates.

Around 850,000 tonnes jet fuel per year is exported to Afghanistan of which 15000 metric tons per month is contributed by Pakistan State Oil.

Published in The Express Tribune, November 16^th, 2012.