KARACHI: The pending tax refunds of multinational companies operating in Pakistan have grown to Rs93 billion, up 15 per cent from October 31, 2022, when the representative body of foreign investors last took up this matter with the revenue collection authority.

A tax refund is a payment to the taxpayer after it has paid to the government more tax than it owes.

Businesses have routinely accused tax authorities of collecting and withholding more-than-due taxes in order to meet their revenue targets.

The Overseas Investors Chamber of Commerce and Industry (OICCI) recently shared with the Federal Board of Revenue (FBR) an exhaustive list of tax refund claims, seen by Dawn, while demanding that the process should be “institutionalised”.

“We understand the Federal Board of Revenue (FBR) has paid Rs208bn refunds between July 2022 and January 2023, including (a) few of our members that have reported partial settlement of their income tax refunds,” OICCI said in its letter to FBR Chairman Asim Ahmad.

Tax refunds should be made through a “first in queue and first to be paid” system, according to M. Abdul Aleem, secretary general of OICCI, which represents over 200 foreign investors from 35 countries and 14 sectors of trade and industry.

The list of tax refund claims shows the most affected entity is the Hub Power Company Ltd. Its outstanding income and sales tax refunds amounted to Rs9bn. K-Electric is second on the list with outstanding sales tax refunds of Rs8.6bn. Claims by Frieslandcampina Engro Pakistan Ltd, Engro Polymer and Chemicals Ltd and Procter and Gamble Pakistan Ltd amount to Rs6.4bn, Rs3bn and Rs2.4bn, respectively.

More than 57pc of all outstanding refund claims are of income tax while the rest belong to the sales tax category.

“We request you to direct the concerned FBR commissioners to review all the pending refund cases and arrange for early settlement of the legitimate claims to ensure that all the old cases are amicably resolved,” Mr Aleem said.

Published in Dawn, February 28th, 2023