K-Electric (KE) on Friday welcomed a recent decision of the Federal Tax Ombudsman (FTO) affirming the company’s full compliance with prescribed laws on sales tax implementation.
In a statement, the power distribution company said the decision had underscored its adherence to best financial and business practices in line with regulatory requirements. The decision, it said, also highlights KE’s proactive implementation of the correct tax treatment, charging and depositing the sales tax and income tax on gross electricity supply, as per prescribed laws.
Earlier this week, the FTO had raised the issue of differing policies between KE and state-owned DISCOs regarding imposition of taxes on net metering customers, resulting in revenue loss to the state treasury. Following an inquiry, the FTO directed all 11 state-owned DISCOs to align their taxation practices with KE, ensuring compliance with the regulatory framework.
As per the FTO ruling, all power distribution companies must collect 18% sales tax on total electricity supply without adjusting for net metering. Its inquiry has found that some companies were charging sales tax on the net amount after adjusting for excess electricity fed back into the grid under net metering.
“This decision reinforces KE’s commitment to upholding the highest financial and governance standards in all areas of our operations,” said KE Chief Financial Officer Muhammad Aamir Ghaziani. “Transparency, regulatory compliance, and robust financial controls are at the core of KE’s practices, and we are pleased that the FTO’s review validates our approach. As a responsible corporate entity, we remain dedicated to following all applicable laws and ensuring that our financial management aligns with national and international best practices,” he added.
As a publicly listed company, read the statement, KE operates under strict governance frameworks, with financial disclosures reviewed by independent auditors and regulatory bodies in accordance with Pakistan Stock Exchange bylaws and global accounting standards.
The company’s adherence to financial prudence has reinforced investor confidence, enabling investments of approximately $4.4 billion across the power value chain since its privatization. As part of the company’s 7-year plan, spanning 2024-2030, KE’s has already secured approval from the regulatory authority to invest an additional $2 billion in its transmission and distribution functions. These targeted investments have positioned KE as the most improved distribution company in Pakistan, it said, with significant reductions in Transmission and Distribution losses and Aggregate Technical and Commercial losses.
On the generation side, KE claims it has significantly improved its generation efficiency post-privatization. “KE remains committed to enriching customer experience through operational excellence, regulatory compliance, transparency and driving sustainable growth for Karachi and Pakistan’s energy sector,” it added.