FBR Says No Advance Tax Applicable on Oil Dealers, OMCs

Staff Report

ISLAMABAD: The Federal Board of Revenue (FBR) has issued a clarification in response to a request from the Ministry of Energy (Petroleum Division) concerning the applicability of section 236H to Oil Marketing Companies (OMCs). The Ministry sought this clarification to determine whether OMCs should be excluded from the section’s provisions.

In its statement, the FBR explained that dealers and retail outlets (petrol pumps) operate on a fixed dealer margin regulated by the Government of Pakistan, placing them within a price-regulated sector. Currently, taxes are collected under section 156A of the Income Tax Ordinance, 2001, which constitutes a full and final discharge of their tax liability.

However, the Finance Act, 2024, extended the scope of section 236H to all sectors of the economy, creating significant challenges for petroleum dealers and retail outlets. In light of these difficulties, the Directorate General of Oil sought clarification from the FBR.Aramco Completes Acquisition of 40% Stake in Gas & Oil Pakistan

The FBR clarified that section 236H does not apply to the dealers and retail outlets of OMCs. These entities fall under the Final Tax Regime as outlined in section 169 of the Ordinance, which ensures a full and final discharge of their tax liability. Consequently, the dealers and retail outlets of OMCs are exempt from the provisions of section 236H.

This clarification is expected to alleviate the financial strain on petroleum dealers and retail outlets, allowing them to operate under the established tax regulations without additional burdens.