LAHORE: Bank Alfalah Limited has reported tax contingencies amounting to Rs2.84 billion for the year ended December 31, 2025, according to its annual financial statements submitted to the Pakistan Stock Exchange (PSX).
The bank stated that its income tax assessments have been finalized up to tax year 2025. However, tax authorities have raised several issues for tax years 2008, 2014, 2017, 2019, and 2021 to 2025.
These include matters related to alleged default in payments under the Workers Welfare Fund (WWF), allocation of expenses against dividend and capital gains income, treatment of dividend income from mutual funds, and disallowance of leasehold improvement expenses.
As a result of these issues, tax authorities have raised a demand of Rs2,844.103 million, compared to Rs1,217.274 million at the end of 2024, after accounting for relief granted during appellate proceedings.
The bank has filed appeals before the Commissioner Inland Revenue (Appeals) and the Appellate Tribunal Inland Revenue (ATIR). Management believes a favorable outcome is likely and therefore has not recorded any provision in its financial statements.
Separately, the bank also received orders from a provincial tax authority demanding sales tax on banking services for the period from July 2011 to December 2020. The orders include tax and penalties totaling Rs763.312 million, excluding default surcharge. Appeals for the period July 2011 to June 2014 are pending before the Commissioner Appeals, while disputes for July 2014 to December 2020 have been filed before the Sindh High Court. These cases were remanded to the adjudicating authority after the end of the financial year.
For accounting years 2016, 2017, and 2018, the bank also received tax orders involving sales tax, further tax, and penalties exceeding Rs25 million. These cases are currently pending before the Commissioner Appeals and the Appellate Tribunal Inland Revenue.
In addition, other tax adjustments raised by authorities for various assessment years remain under appeal before different judicial forums, including the Commissioner Inland Revenue (Appeals), ATIR, the Sindh High Court, and the Supreme Court of Pakistan.
Bank Alfalah Limited emphasized that all disputed tax matters are currently under appeal and expressed confidence that these issues will ultimately be resolved in the bank’s favor through the legal process.
