The Federal Board of Revenue (FBR) has outlined critical provisions related to the exploration and production of oil, natural gas, and other minerals under Section 100 of the Income Tax Ordinance, 2001. This section, updated through the Finance Act, 2021, provides a framework for taxation specific to the energy and mining sectors, reflecting their importance to Pakistan’s economy.
Scope of Section 100
Section 100 addresses profits and gains from:
1. Exploration and production of petroleum, including natural gas, and operations at refineries situated in Dhodak and Bobi fields.
2. Pipeline operations managed by exploration and production companies.
3. The manufacture and sale of liquefied petroleum gas (LPG) and compressed natural gas (CNG).
These profits are taxed per rules specified in Part I of the Fifth Schedule to ensure streamlined taxation for businesses involved in resource exploration and extraction.
Limitations and Exclusions
However, Sub-section (2) of Section 100 clarifies that profits from petroleum or natural gas discovered before September 24, 1954, are excluded from this framework. Notably, from the tax year 2017 onward, profits from the Sui gas field are explicitly exempted from these provisions.
Mineral Exploration and Extraction
Expanding on mineral resource taxation, Sub-section (3) applies to businesses engaged in the exploration and extraction of other mineral deposits of a wasting nature, excluding petroleum and natural gas. These activities are governed by Part II of the Fifth Schedule, ensuring specialized tax treatment for resource industries involved in diverse mineral exploration.
Strategic Importance
The Ordinance underscores the strategic role of energy and mineral exploration in national economic development. Tailored tax provisions aim to encourage investment in these sectors, ensuring a structured approach to resource utilization while providing fiscal clarity for investors.
The focus on exploration within this section highlights its significance in unlocking Pakistan’s resource potential, with the government leveraging specific tax rules to support sustainable industrial growth.
Disclaimer
The information above aims to summarize Section 100 of the Income Tax Ordinance, 2001. Efforts have been made to present accurate details; however, users should consult the official FBR document or legal experts for precise interpretations.