Govt pledges tax relief for refineries in Budget FY26

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ISLAMABAD: The government has assured Pakistan’s leading oil refineries that it will permanently resolve the controversial sales tax exemption on petroleum products in the next federal budget, the move has been seen to open $ 6 billion in a long -collected infrastructure upgrade throughout the sector.

At a high -level meeting held on Tuesday, the managing directors of chief executives and major refineries, including the Pakistan Refinery Limited, Attock Refinery, National Refinery, National Refinery, Parco and Syraziko, praised them for their praise for their meeting with Petroleum Ali Puz Malik.

Refinery welcomed the government’s decision to temporarily resolve the issue for fiscal year 25 and highlighted the urgent need for a permanent resolution in the fiscal year 26 budget. Under the Finance Act 2024, petroleum products were re -divided from zero rate to exempt, which removed the ability to claim input tax adjustment. Refinery argued that the change in this policy significantly increased the costs of both operational and capital, which threatened the trade project of modernization.

An official in the meeting said that the Minister of Petroleum has taken up the matter directly with Prime Minister Shahbaz Sharif and the Finance Ministry, and assured the industry that a permanent resolution will be included in the next federal budget. The Minister said the government’s actions reflect its “commitment to support its sector, which plays an important role in Pakistan’s energy safety and economic growth”. He added that the planned upgrade will not only increase production efficiency but also support the transfer to cleaner and more sustainable energy sources.

Refinery executives have warned that the policy will stop investing $ 6 billion needed to upgrade refineries in euro-V standards, without consistency. He emphasized that an ad hoc approach would not be enough and called on the government to stabilize the tax policy for at least seven years. He said the sales tax exemption is against the government’s brown field refining upgrade policy announced in August 2023, which promised to modernize financial privileges. Minister for Petroleum Tax Resolution – temporarily increased the margin of freight equality (IFEM) at Rs 1.87 per liter to cover the losses during the financial year 25. Refinery and oil marketing companies have suffered a loss of Rs 34 billion due to tax changes.

“The minister deserves praise to resolve the issue shortly after understanding and assuming power,” said the chairperson of the Oil Companies’ Advisory Council (OCAC) and the CEO of Atak Refinery Adil Khattak.

Refinery reaffirmed their preparations to move forward with planned modernization plans, which aims to reduce import dependence, improve fuel quality, and promote clean energy through euro-V-standard fuel manufacture. He also praised the Prime Minister’s personal support and confirmed his commitment to align the cleaner, with a high -energy series of Pakistan.

Refinery upgrades are expected to significantly increase environmental standards, promote local production and attract foreign investment. Officials noted that the move has created a fundamental component of the government’s wider strategy to enhance economic stability and industrial competition. The delegation included CEO of Pakistan Refinery Limited Zahid Mir. Managing Director of Parco Artiza Qureshi; Adil Khattak, CEO of Atak Refinery; CEO of Sijiko Aamir Abbasi; And CEO of National Refinery Limited Assad Hassan.