The international oil giant, Shell Pakistan is irked over continuous delays in payment of over five billion rupees by the government of Pakistan on account of price differential claims, sales tax and petroleum development levy refunds.
In addition, the petroleum company is also negotiating with relevant fiscal authorities in Islamabad to reconsider doubling of minimum tax on turnover to one percent.
“The company is suffering an immense burden due to the doubling in rate of minimum tax on turnover to 1 percent which has now driven our effective tax rate to 140 percent,” Shell Pakistan Chairman and CEO Zaiviji Ismail Bin Abdullah told the directors at the Karachi Stocks Exchange in a letter on Friday.
“This is causing a serious impact on future robustness and sustainability of our business and we have been engaged with relevant fiscal authorities to try and find a suitable solution of this matter,” the chairman said. He was also choleric over delays from the Government of Pakistan in payment of refunds amounting to over five billion rupees.
“The delays are causing serious concerns amongst our shareholders and we have suffered financing costs of three billion rupees since the inception of these receivables,” Zaiviji noted. He maintained in his letter that these outstanding dues should be cleared at the earliest to ease all key stakeholders.
He urged quick address to important issues like the current corporate taxation, as these steps would help the crises-hit government create an environment that is conducive for long term business. The chairman also disclosed that besides the committed Rs 15 million, his company had secured an additional Rs 40 million from its parent company, Royal Dutch Shell, for rehabilitation of flood-affected areas in Pakistan.
Zaiviji was upbeat that Shell Pakistan would be able to participate in the increased demand for oil products as soon as the flooded country moves into the rehabilitation phase.