Ipp Sector Concerned Over Fbr Tax Reinterpretation In Islamabad

The recent reinterpretation of Pakistan's Income Tax Ordinance (ITO) has raised alarm among Independent Power Producers (IPPs), particularly those involved in projects under the China-Pakistan Economic Corridor (CPEC). The China Power Hub Generation Company (CPHGC) has reported a potential tax exposure of Rs 42.145 billion due to show-cause notices received for several tax years, following a ruling by the Appellate Tribunal Inland Revenue. CPHGC's CEO, Shi Zhenxing, emphasized the urgency for intervention by the Private Power and Infrastructure Board (PPIB), stating that this reinterpretation "overturns an established understanding under the IPP regime" and threatens the sanctity of contracts that have been in place since the inception of the IPP framework. The Federal Board of Revenue's new stance classifies Capacity Purchase Price (CPP) and Delayed Payment Interest (DPI) as taxable, which contradicts previous tax-exempt statuses, raising concerns about the predictability of fiscal policies in Pakistan's energy sector (Profit Pakistan, February 23, 2026; Business Recorder, February 22, 2026).