Karachi, March 7, 2024 – The National Bank of Pakistan (NBP) is grappling with a substantial increase in tax contingencies, soaring to an astonishing Rs 34.73 billion by the close of the calendar year 2023.
As disclosed in the annual financial report for the calendar year 2023, the NBP highlighted that the cumulative impact of contingencies as of December 31, 2023, which includes an amount of Rs 1.91 billion related to indirect tax issues (compared to Rs 1.91 billion on December 31, 2022), now stands at Rs 34.73 billion, a significant surge from Rs 27.16 billion recorded on December 31, 2022.
Remarkably, the bank asserted that no provisions have been allocated against these contingencies, guided by the insights of tax consultants who anticipate favorable outcomes upon the resolution of pending appeals.
The NBP further revealed that the income tax return for the year 2023 has been filed, treated as a deemed assessment order. The taxation officer, following the instructions and directions of the learned CIRA, issued appeal effect orders for tax years 2019, 2020, and 2022. The tax liability (refund) has been assessed at (Rs. 1,852) million, Rs. 1,997 million, and (Rs. 8,774) million, respectively.
In a noteworthy development, the Honourable ATIR has issued appellate orders for tax years 2006 and 2007 against monitoring orders, determining that the proceedings are time-barred. However, the DCIR’s orders have been remanded back to the assessing officer with instructions to proceed further if any relevant information is already available with the tax department.
Adding another layer of complexity, the ATIR has passed an appellate order for the tax year 2016 against a monitoring order, remanding the issues back to the assessing officer for a thorough re-verification of the facts, adhering to the instructions of ATIR.
As the NBP grapples with these intricate tax scenarios, the financial landscape awaits further developments, and stakeholders are keenly observing the unfolding narrative, anticipating resolutions and implications for the bank’s fiscal health and future stability.
