Millat Tractors Limited Challenges FBR’s Rs18 Billion Tax Demand

Pakistan’s leading tractor manufacturer, Millat Tractors Limited (MTL), has strongly opposed the Federal Board of Revenue’s (FBR) Rs18 billion sales tax demand, calling it “unrealistic and illegal.” The company has vowed to contest the order through all appellate forums, emphasizing that such actions could harm the investment climate and discourage businesses.

FBR’s Rs18 Billion Sales Tax Demand

The FBR’s tax demand follows an audit conducted under the directive of President Asif Ali Zardari. The case was finalized by the Large Taxpayer Office (LTO), Lahore, and an implementation report was submitted to the President via the Federal Tax Ombudsman (FTO) on January 25, 2025.

FBR’s Justification for the Tax Demand

• The FBR claims the tax demand is a result of a detailed audit of Millat Tractors.
• The audit was part of the President’s initiative to ensure tax compliance among large corporations.
• The tax demand includes penalties and liabilities amounting to Rs18 billion.

Millat Tractors’ Response

Millat Tractors strongly criticized the FBR, arguing that:

• The demand is unrealistic and illegal.
• The FBR is targeting existing taxpayers instead of broadening the tax base.
• Such measures hurt business confidence and the investment climate.
• The company will contest the demand through legal channels, expressing confidence in getting justice.

This tax dispute highlights broader concerns in Pakistan’s business community. Many firms fear that arbitrary tax demands could lead to:

• Discouragement of local and foreign investment.
• Reduced economic activity due to an uncertain tax environment.
• Legal battles that consume time and resources, affecting corporate productivity.

Millat Tractors has officially notified the Pakistan Stock Exchange (PSX) about its stance. The company’s legal team is preparing to challenge the FBR’s order, and further developments are expected as the case moves through appellate forums.

The tax dispute between Millat Tractors and the FBR underscores the ongoing challenges in Pakistan’s tax system. While the government aims to boost revenue collection, businesses argue that arbitrary tax demands can be counterproductive. The outcome of this legal battle will set a precedent for how corporate tax disputes are handled in Pakistan.