Karachi, October 2, 2025 – Pakistan State Oil (PSO), the country’s largest energy supplier, has disclosed a series of income tax contingencies in its financial statements up to June 2025, highlighting long-standing disputes with the Federal Board of Revenue (FBR).
The company outlined multiple assessments raised by the tax authorities, many of which are currently under litigation before appellate forums and higher courts.
According to the disclosure, the Additional Commissioner Inland Revenue (ADCIR) passed several contentious orders in recent years. One major development occurred on March 26, 2025, relating to Tax Year 2024, which created a demand of over Rs. 568 million. PSO challenged the decision at the Islamabad High Court (IHC), where the court has suspended the order and merged it with a broader constitutional challenge against the Alternate Dispute Resolution Committee (ADRC) under Section 134A of the Income Tax Ordinance, 2001. The company, relying on its legal advisors, believes the matter will ultimately be decided in its favor and therefore made no provision in its accounts.
Similarly, for Tax Year 2020, an order raised a demand of Rs. 59.4 million, which was later upheld at multiple appellate levels. However, PSO again sought relief before the IHC, maintaining its position that the ADRC framework lacks constitutional validity. Parallel disputes exist for Tax Years 2021, 2022, and 2023, involving tax demands running into billions of rupees. In each case, the company emphasized that based on legal counsel, there is a strong likelihood of success.
The disclosure also revisited older assessments dating as far back as 2009. For instance, during Tax Year 2014 and 2015, the FBR raised staggering demands exceeding Rs. 35 billion, which were later rectified to Rs. 3.6 billion. Following appeals and rectifications, the figure was reduced to approximately Rs. 2.5 billion. Disputes from earlier years, including Tax Years 2009 to 2013, also remain under consideration before the Appellate Tribunal Inland Revenue (ATIR).
PSO clarified that despite the massive figures involved, no accounting provisions have been recorded against these disputed demands. The management, citing the professional views of its tax advisors, stated that the issues revolve around interpretation of income tax laws and therefore remain contestable.
The company underscored that the contested amounts are not final liabilities and will only materialize if the courts ultimately rule against PSO. Until then, these sums are treated as tax contingencies rather than actual obligations.
The disclosure comes at a time when tax compliance and litigation are under greater scrutiny in Pakistan’s corporate sector. Analysts believe PSO’s approach reflects a cautious balance between transparency and financial prudence, ensuring shareholders remain informed without overstating liabilities.
By sharing the detailed status of its income tax disputes, PSO reaffirmed its commitment to regulatory compliance while signaling confidence in favorable judicial outcomes. The final resolution of these matters, however, rests with the higher courts, where multiple petitions and appeals remain pending.
PSO Income Tax Contingencies – Summary
| Tax Year | Tax Demand (Rs.) | Status / Forum | Current Position |
| 2024 | 568,165,000 | IHC (Merged with ADRC challenge) | Order suspended, pending adjudication |
| 2023 | 1,486,065,000 | CIR (Appeals), ADRC, IHC | Appeals filed, pending in High Court |
| 2022 | 2,557,721,000 (later amended to 3,477,249,000) | CIR (Appeals), ATIR, IHC | Partially decided, still pending |
| 2021 | 3,014,870,000 (later amended to 3,520,201,000, reduced to 3,477,249,000) | CIR (Appeals), ATIR, IHC | Partially decided, reference pending |
| 2020 | 59,435,000 | CIR (Appeals), ADRC, IHC | Decided against PSO, pending High Court decision |
| 2019 | 411,567,000 | CIR (Appeals), ATIR | Appeal pending |
| 2018 | 207,773,000 | CIR (Appeals), ATIR | Appeal pending |
| 2016–2017 | 2,685,964,000 | CIR (Appeals), ATIR | Partially decided, balance pending |
| 2014–2015 | 35,992,978,000 (later rectified to 3,619,899,000, reduced to 2,532,750,000) | CIR (Appeals), ATIR | Partially decided, balance pending |
| 2012–2013 | 3,096,173,000 | CIR (Appeals), ATIR | Mostly in favor, balance pending |
| 2009–2011 | 4,598,246,000 (revised to 740,871,000) | CIR (Appeals), ATIR | Partial relief, balance pending |
Note: The reported tax amounts are under dispute and may change after legal proceedings. The final outcome will depend on court and regulatory decisions. Readers are advised to verify all figures through official financial statements. PkRevenue shall not be held responsible for any errors or omissions.