ISLAMABAD: The International Monetary Fund (IMF) has imposed a condition for the imposition of sales tax on petroleum products.
The IMF has refused to grant tax exemptions on imported machinery for upgrading refineries in Pakistan to refine standard oil.
According to sources, an 18 percent tax condition has also been imposed on petroleum products for cost recovery.
The government’s position is that if the IMF’s demand to impose a sales tax of up to 2 percent on petroleum products is accepted, the price of petrol may have to increase by Rs 47.50 per liter, and the cost of diesel by more than Rs 50 per liter.
According to sources, the IMF has imposed a sales tax condition for a 72 percent investment return.
The government says that currently, no refinery in Pakistan has the capacity to refine Euro V oil. Only Euro 2 and Euro 3 category petrol and diesel are being refined.
An investment of $6 billion is required for the upgradation of refineries. For which the government has also requested the IMF for the required machinery and tax-free loans.
According to sources, the substandard diesel used in the country contains sulfur, which is harmful to the environment and health.
Due to the lack of standard oil refining facilities in local refineries, 70 percent of petrol and 30 percent of diesel have to be imported.
Pakistan imports approximately 20,000 metric tons of petrol and 18,000 metric tons of diesel daily. On which, in addition to exchange rate fluctuations, the prices of petrol and diesel increase due to the imposition of taxes.
