The Federal Board of Revenue (FBR) Pakistan has decided to re-open a Rs. 1.2 billion tax demand case against K-Electric, after a long span of three years.

Nisar Muhammad Khan, FBR Chairman, during an audit objections meeting of the Public Accounts Committee (PAC) revealed:

We are reopening the K-Electric case in the light of a decision taken by the Departmental Accounts Committee (DAC).”

The FBR has taken this decision during the transition phase of K-Electric and the Chinese company Shanghai Electric. The Abraaj Group owned Electric company has decided to sell the stakes for $1.77 billion. Due to K-Electric being a KES owned corporation, an offshore company by Abraaj, the mentioned amount won’t pass through Pakistan, as revealed by regulatory approval officials.

However, this decision was challenged by the Auditor General of Pakistan (AGP), who objected against setting aside the mentioned amount. At the AGP’s reservation, the decision was taken to a DAC meeting – containing elite audit and FBR representatives.

“DAC directed that the department (FBR) make the reference in K-Electric’s case involving Rs1.19 billion.”

Therefore, the meeting concluded that FBR had a loophole and it didn’t collect the Rs. 1.19 billion relevant taxes.

Such a vast amount of money in the form of taxes against K-Electric at the time of its transition can be harmful for the Electricity provision corporation.

PAC has also commanded the FBR to actively reinstate the demand of taxes accounting to Rs. 2.85 billion against Sui Southern Gas Company. The case is impending in Sindh High Court for years.

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