The Federal Board of Revenue (FBR) has declined to grant a tax exemption, estimated between $40-50 million, for the Turkmenistan–Afghanistan–Pakistan–India (TAPI) gas pipeline project.
This decision aligns with Pakistan’s commitment to the fiscal discipline mandated by the International Monetary Fund (IMF).
The FBR also denied tax exemptions to local refineries for incentives from the ESCROW account, a part of the government’s refinery policy for upgrades.
The Petroleum Division circulated a draft summary for the inclusion of the TAPI project under the Foreign Investment Promotion and Protection (FIPPA) Act 2022 on October 3, 2023.
The Economic Coordination Committee (ECC), in its meeting on December 28, 2023, reviewed the proposal and directed further discussion between the Petroleum Division, FBR, and the Finance Division.
The FIPPA Act, approved by parliament in 2022, primarily aimed to provide legal coverage for the Reko Diq project, a copper and gold mine in Balochistan developed by a foreign consortium.
Turkmenistan requested the inclusion of the TAPI project under FIPPA, believing Pakistan had already assured protection of Turkmen investment through a sovereign guarantee under the Host Government Agreement (HGA).
The addition of FIPPA status would offer legislative protection similar to that provided to the Reko Diq project and potentially boost the credibility of Turkmen gas companies for securing loans.
