ISLAMABAD, Dec 4: The Federal Board of Revenue (FBR) has exempted oil marketing companies (OMCs) from the payment of 15 per cent general sales tax on import of crude petroleum oil to mitigate their cash flow problems.

Apparently, the decision had been taken in the wake of the government decision of withholding the price differential amount of the OMCs, running into billions, which had resulted into cash flow problems.

A sales tax notification SRO1164 dated November 30, 2007 was released here on Tuesday by amending the earlier notification SRO462 dated June 9, 2007 to extend this facility to the oil marketing companies.

Under this decision, the oil companies would now be importing crude oil at zero rate of GST. Earlier, these companies paid the GST at import stage but it was refundable after value-addition.

However, the collection of 15 per cent GST will continue from consumers at retail stage.

When contacted by Dawn Special Secretary Finance Dr Ashfaq Hassan Khan had shown ignorance about the FBR latest notification.

“I have checked this with finance minister and finance secretary but they were not aware of any decision taken in this regard,” Mr Khan said.

When asked about the impact of the decision on the economy, he replied that when he was not aware of the notification how could he comment on the issue.

The price differential amount of the oil companies surged to Rs41 billion till November 30, 2007. The government has not been passing on the impact of rising crude prices to the consumers for the last several months.

FBR Member Sales Tax Mussarat Jabeen confirmed to Dawn over telephone on Tuesday that the GST had been exempted on import of crude petroleum oil.

Asked about the impact of the decision on oil price at retail stage, the member replied that the petroleum price was fixed by petroleum ministry.

A senior tax official in the FBR told Dawn that one of the logics behind the decision could be to mitigate the liquidity problems of the oil marketing companies. As the same tax collected at import stage from OMCs was refundable, so the decision would not have any impact on the revenue.

He also did not rule out the possibility of corruption in the oil refunds like other sectors — textile. This decision would do away with this corruption in the payment of refunds to companies, the official added.

The FBR raised around Rs18 billion GST from POL products including crude oil at import stage in July-September this year over the last year. The GST collected at domestic level stood at around Rs7.6 billion during the period under review.

According to the notification SRO1164 dated November 30, 2007 which reads: “As the federal government is pleased to direct that the following amendments shall be made in its Notification No SRO 462(I)/2007 dated June 9, 2007, namely: In the aforesaid Notification, in the table, after S. No. 8 in the first column and the entries relating thereto in the second and third columns, the following new serial number and the entries relating thereto shall be added, namely: Petroleum crude oil 2709.0000.”