FBR imposes additional tax liability on Meezan Bank

Meezan Bank faces increased tax liability due to changes in deemed assessment order by FBR

Meezan Bank Limited has been hit with additional tax liability by the Federal Board of Revenue (FBR) after changes were made to the deemed assessment order, according to sources on Friday.

Official documents show that the FBR has revised Meezan Bank's deemed assessment orders for previous years, including the 2021 tax year. The changes relate to the allocation of expenses for dividends and capital gains, provisions for loans and advances, investments, and other assets.

The revised order for the 2015 tax year raised additional issues concerning the taxability of the gain on a bargain purchase and the non-adjustment of losses for HSBC Bank Middle East – Pakistan Branches.

Meezan Bank has secured a stay order from the High Court of Sindh against the demands made through the revised order for the 2015 tax year, and both the bank and the tax department have filed appeals with the appellate authorities regarding these matters.

The bank's management, working with tax advisors, remains optimistic that the decision will be in their favor. As a result, no provision has been made in the unconsolidated financial statements regarding these matters. Nevertheless, the additional tax liability related to the gain on a bargain purchase and non-adjustment of losses for HSBC Bank Middle East – Pakistan Branches amounts to Rs. 1,096 million and Rs. 706 million, respectively.