The National Board of Revenue has reinstated the value-added tax and supplementary duty waiver for international oil companies on production and supply of natural gas, condensate and other petroleum products with retrospective effect from July 2019.
The NBR’s VAT wing on Sunday issued a statutory regulatory order waiving the taxes subject to certain conditions, including submission of financial statements along with the monthly amounts of the waived VAT, to the field-level VAT offices of the revenue board.
The IOCs had been enjoying the exemption since 1993 under the production sharing contract with the government.
The NBR withdrew the exemption facility in the budget for the last fiscal year 2019-2020 upon implementation of the new VAT and SD Act2012.
Since then, the power energy and mineral resources ministry, Petrobangla and Chevron had been demanding reinstatement of the waiver on grounds that the prices of the products would go up if the VAT and SD were included in the price.
If the exemption facility was not reinstated, foreign direct investment in the sector would also be discouraged as the government attracted the FDI to the sector by offering a set of benefits, including tax exemption, the entities argued.
Petrobangla would also have to bear the additional burden of the tax as per the conditions of the Production Sharing Contract signed with the IOCs.
Officials of the revenue board said that they reinstated the benefit to keep the prices of natural gas and petroleum products unaffected and make FDI in the sector attractive.
The benefit will applicable only for companies who had signed the PSC with the government, they said.
Currently, the IOCs supply around 60 per cent of the total gas produced in the country.
The revenue board, through another SRO, exempted ONGC Videsh ltd from payment of advance income tax on import of machinery and goods required to conduct oil and gas exploration activities at offshore blocks SS-04 and SS-09 in the Bay of Bengal.
The NBR’s income tax wing on Monday issued an SRO saying that the machinery and goods could not be transferred or sold locally.
ONGC Videsh Ltd must comply with the conditions of the agreements signed with the Petrobangla in this connection.
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