Ministry of Foreign Affairs of Azerbaijan has taken away a major Value Added Tax (VAT) refund facility from the Embassy of Pakistan in Baku (Azerbaijan) available on the purchases and services rendered by the said embassy in Baku.
In this connection, the Ministry of Foreign Affairs has urgently taken up the matter with the tax authorities of the Federal Board of Revenue (FBR) against the discontinuation of the Value Added Tax (VAT) exemption facility available on purchases and services of Embassy of Pakistan in Baku (Azerbaijan).
Ministry of Foreign Affairs has apprehended many VAT refund cases of different embassies and foreign missions are pending with FBR. If the cases of refunds are not timely processed by the FBR, the privileges extended to Pakistan’s missions abroad will be dealt with reciprocity by the concerned countries.
“The matter may be given top priority by the FBR”, the Ministry of Foreign Affairs stated.
In a communication to the FBR, the Ministry of Foreign Affairs stated that on the pretext that FBR (Pakistan) is not allowing the tax exemption facility to the Embassy of Azerbaijan in Islamabad, the Ministry of Foreign Affairs of Azerbaijan by invoking the principle of reciprocity has withdrawn the facility of the VAT refund on all purchases and services to Pakistan’s mission in Baku.
It may be noted that Azerbaijan’s decision of refusing VAT exemption would have serious financial repercussions for Pakistan’s mission and that too in foreign exchange i.e. additional burden of 18 percent on rents, school fee and other purchases. In these times of financial constraints for Pakistan’s diplomatic missions abroad, the curtailment of long-lasting VAT exemption facility is increasing a big chunk of Mission’s monthly expenditure, the Ministry of Foreign Affairs said.
Moreover, a number of VAT cases of various embassies are pending with FBR which may be processed in a timely manner, failing which, privileges extended to Pakistan’s missions abroad will be dealt with reciprocity. The situation will not be helpful for our forex reserves, the Ministry of Foreign Affairs stated.
Foraging in view, the Ministry of Foreign Affairs has requested the FBR to look into the matter with a view to immediately process pending VAT refund cases of the Azerbaijan Embassy as well as of all other diplomatic missions so that the situation for our Mission abroad could be reverted.
The Ministry of Foreign Affairs has further requested the FBR that a focal person in the FBR may be nominated if deemed appropriate to carry forward conversation on this score.