Day: March 20, 2019

Informal donations prone to money laundering: SECP

KARACHI: Pakistan has been rated amongst most charitable nations in the world but most donations are routed informally which makes the whole exercise prone for terror financing and money laundering, Waseem Ahmad Khan, Additional Director, Securities and Exchange Commission of Pakistan (SECP) said on Wednesday.

He was addressing at a seminar organized by Karachi Tax Bar Association (KTBA) at auditorium of Regional Tax Office (RTO) Karachi.

He said that SECP and State Bank of Pakistan (SBP) had taken initiatives to fix the issues on Anti Money Laundering (AML)/Countering Financing Terrorism (CFT) pointed out by Financial Action Task Force (FATF).

He informed the participants that FATF is a 37-member global body established in 1989 with mandate to combat money laundering, terror finance and nuclear non-proliferation. Besides it has also associates observers.

Pakistan as a member has international obligations to comply with FATF recommendations and correspondingly it had promulgated relevant laws including Anti-Terrorist Act, 1997, Anti-Money Laundering Act, 2010, National Counter Terrorism Act, 2013 etc. and had also devised national action plan.

Waseem Ahmad said that the SECP was undertaking enhanced due diligence on the basis of territorial / geo-political basis, sectoral lines and channel of donations.

In order to realize the full impact of spirit of generosity of Pakistan horizontally, he suggested risk management should be set up by every non-profit organization (NPO).

Khalid Mahmood, President, KTBA, in his welcome address thanked the speaker and audience who attended the seminar in a big number. The even was moderated by KTBA vice president Zeeshan Merchant.

March 20, 2019
FBR outlines sales tax amendments through second supplementary finance act

ISLAMABAD: Federal Board of Revenue (FBR) has summarized amendments to sales tax regime through Finance Supplementary (Second Amendment) Act, 2019 and directed the officials of Inland Revenue to take necessary action for implementation.

The FBR said that to liquidate huge amount claimed by taxpayers in refunds which have been accumulated over a long time, the government has decided to pay the same through sales tax refund bonds, which shall have a maturity period of three years.

Simple profit at 10 percent per annum is also proposed to be paid. The claimants shall also be able to raise the much needed cash by selling these notes in the security market.

A new Section 67A has been inserted in the Sales Tax Act, 1990 to include enabling provisions for payment of refunds in this manner and also to provide for regulatory mechanism relating to issuance, transfer, redemption and other related matters.

The FBR said that in the Sixth Schedule, the exemption of sales tax already available in relation to plant, machinery and equipment required for power generation from renewable sources of energy has been guaranteed up to June 30, 2023, to provide for certainty and confidence to investors. Same protection has been ensured on the import side of the similar equipment as covered under the Sixth Schedule.

The FBR said that keeping in view the difficulties being faced by cancer patients and also on the orders of the Supreme Court, items related to ostomy procedures for treatment of cancer patients, which were not expressly and exhaustively mentioned in Sixth Schedule to Sales Tax Act, 1990, have now been so covered by substituting Serial Number 117 and relating it to heading 99.25 in the First Schedule to the Customs Act.

The FBR said that presently sales tax exemption on plant and machinery is available only to specified sectors. Others sectors have to pay sales tax on import of plant and machinery.

This sales tax is adjustable against future output tax but such adjustment takes place after a long time when the industry starts selling its product. This serves as an impediment to investment by increasing initial costs.

In order to encourage green field investment and industrialization, exemption from payment of sales tax on imported plant and machinery to be used for setting up new industry for production of taxable goods has been provided by amending Sixth Schedule to the Sales Tax Act, 1990, as imported by the persons registered on or after 1st July, 2019 through Sr No 150 in Table 1 of Sixth Schedule to the Sales Tax Act, 1990.

The FBR said that the new rates on the import of cellular mobile phones have been introduced by substitution in the Ninth Schedule to the Sales Tax Act, 1990.

March 20, 2019
FBR explains FED on motor vehicles under Second Amendment Act

ISLAMABAD: Federal Board of Revenue (FBR) on Wednesday explained the amendment of Federal Excise Duty (FED) on imported and locally manufactured vehicles through Finance Supplementary (Second Amendment) Act, 2019.

The FBR said that Serial Number of Table 1 of the First Schedule to the FED Act, 2005 had been amended and duty of the imported motor vehicles of 1800 cc to 3000cc had been enhanced to 25 percent ad valorem.

Further, a new Serial Number 55A has been inserted whereby rate of federal excise duty has been enhanced to 30 percent ad valorem on import of motor cars, SUVs and other motor vehicles of cylinder capacity of 3000cc of above (other than those vehicles as designed for the transport of 10 or more persons.

The FBR said that federal excise duty on locally manufactured cars SUVs etc. of engine capacity exceeding 1700CC and above at 10 percent ad valorem had also been introduced.

March 20, 2019
Younus Dagha posted as Secretary Finance

ISLAMABAD: The government has posted Younus Dagha, BS-22 officer of Pakistan Administrative Service as Secretary Finance Division with effect from March 22, 2019.

Younus Dagha has been transferred from the present post of Secretary, Commerce Division, a notification issued by Establishment Division on Wednesday.

According to profile Mohammad Younus Dagha, born on April 23, 1962, is a career Civil Servant having joined the Government of Pakistan in 1985.

He possesses varied experience in the fields of Energy, Finance, Commerce, International Trade and Public Administration. He holds post graduate degrees in Business Administration, Economics, Law and Commerce equipping him with required academic background to adeptly manage multifaceted assignments in his career.

During an illustrious career spanning over 20 years, he has successfully accomplished many challenging assignments. From being an Administrator at various tiers in the Provinces of Sindh and Khyber Pakhtunkhwa to Project Director in mega projects,

Dagha possesses a vast and varied experience. He was assigned the challenging task of bringing country’s unutilised energy treasure in the Thar Coalfields to fruition – an immense natural resource with a potential of 175 billion tons of lignite coal, which till then had become an abject failure.

Dagha conceived and successfully executed a plan to bring back the local and international investors’ interest in the development of the Thar coalfield.

The JV between the GoSindh and Engro, known as Sindh Engro Coal Mining Company is now set to become the largest Public Private Partnership Company in Pakistan.

As Secretary Investment in Sindh, Dagha facilitated numerous Wind Energy projects in Jhampir-Gharo Wind Corridor which are now fast reaching their execution stage.

Similarly, during his stay in Gilgit-Baltistan as Chief Secretary, he played a vital role in facilitating land acquisition and resettlement process which is at a final stage now.

Younus Dagha joined as Federal Secretary in the Ministry of Water and Power on 17th Oct 2014, at a difficult juncture when the power sector was facing multiple crises. Power outages, especially in the Industrial sector, were taking a toll on the economy, causing frequent protests.

The inter-corporate (circular) debt in the sector was continuously mounting at a pace of Rs. 14.5 billion every month, the generation had retarded due to drying cash flow and no new investments were forthcoming under serious doubts over sector’s capacity to pay.

The ensuing year 2015 became a game changer for the power sector. Benefitting from the assiduous management, effective monitoring and better financial controls brought in by Dagha, the power sector witnessed a major turnaround.

The investors, especially under China-Pakistan Economic Corridor, were provided with the required policy incentives and facilitation to ensure timely initiation of the new generation and transmission projects.

The result was that 2015 became the best performance year for the power sector not only in the history of the country but in the entire region.

Country’s exports were in continuous decline for the last three years and a BoP crisis seemed imminent when Dagha was appointed as Secretary Commerce in April 2017, to salvage the grim situation.

On assuming charge as the new Secretary, Dagha chalked out an elaborate reform agenda for the Ministry of Commerce and its attached organizations.

Ranging from Governance Reforms to Policy, Institutional and Commercial Diplomacy, all critical facets affecting the performance of the Ministry were revamped.

In a short span of nine months he was able to secure and successfully implement a Prime Minister Export Enhancement Package to the tune of Rs. 180 billion for supporting the export industry.

On the policy side, his achievements include; rationalization of imports, effective enforcement of SPS standards, simplification of procedures, formulation of e-commerce framework and preparation of five year Strategic Trade Policy Framework to provide a long-term predictable regime.

His accomplishments in the area of Commercial Diplomacy comprise successful midterm review of GSP plus, launching of ‘Look Africa Plan’ market access strategy for South American region, unilateral expansion of Indonesia Pakistan Preferential Trade Agreement to include Pakistan’s priority export products, breaking the deadlock of long stalled negotiations on 2nd Phase of Pakistan China FTA and putting in place a robust monitoring mechanism to evaluate performance of the trade officers posted abroad.

By far his most remarkable initiative is the launching of “Emerging Pakistan” campaign to successfully brand country’s image internationally.

As a result of his prudent and timely interventions the decline in exports was not only arrested but put on a growth trajectory. Between July to December, 2017 the exports registered an average growth of 12 percent.

Apart from this, Dagha’s tenure in the Finance Ministry as Special Assistant to FM and Additional Secretary (External Finance) provided him the insight into the working of the International Financial Institutions.

March 20, 2019
KSE-100 index falls by 65 points on weak sentiments

KARACHI: The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) fell by 65 points owing to week sentiments prevailed on Wednesday.

The index closed at 38,548 points as against 38,612 points showing a decline of 65 points.

Analysts at Arif Habib Limited said that the weak sentiment caused the index to remain range bound. After an initial increase of 54 points, the index fell down by 185 points which was witnessed by close of market.

Recovery from lowest level couldn’t help close the index in green. Mainly volume was observed in PTC (11 million), followed by BOP and WTL.

Sector wise, Technology sector topped the chart, followed by Banks and Cement. Poor quarterly sales numbers for North based cement manufacturers caused anxiety amongst investors, however, buying activity matched the selling pressure in Cement stocks. Banks, Autos, OMCs and Steel sectors contributed on the down side to the index.

Sectors contributing to the performance include Power (-50 points), O&GMCs (-39 points), Tobacco (-13 points), Fertilizer (+46 points), Banks (+36 points), E&P (+15 points).

Volumes increased from 70.8 million shares to 83.1 million shares (+17 percent DoD). Average traded value also increased by 9 percent to reach US$ 248 million as against US$ 22.7 million.

Stocks that contributed significantly to the volumes include PTC, BOP, WTL, PAEL and DCL, which formed 41 percent of total volumes.

Stocks that contributed positively include ENGRO (+37 points), MCB (+15 points), PPL (+14 points), UBL (+9 points), and DAWH (+7 points). Stocks that contributed negatively include HUBC (-47 points), SNGP (-19 points), PMPK (-13 points), PSO (-10 points) and SEARL (-6 points).

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March 20, 2019
Rupee weakens by five paisas against dollar

The Pakistani Rupee faced a slight depreciation of five paisas against the US Dollar on Wednesday, attributed to increased demand for import and corporate payments.
(more…)

March 20, 2019
FBR assigns Benami properties cases to BTB zones

ISLAMABAD: Federal Board of Revenue (FBR) has assigned Broadening of Tax Base (BTB) Zones to initiate cases against Benami properties and directed to submit challan within 120 days.

The FBR on Wednesday said Benami Transactions (Prohibition) Rules, 2019 have been enforced with immediate effect and BTB zones of Inland Revenue Service have been assigned the duty to establish cases against Benami properties and submit challan to Adjudication Authority within 120 working days.

After Implementation of Benami Transactions (Prohibition) Rules, 2019.The Federal Board of Revenue (FBR) has clarified that a Benami property means any property which is subject matter of Benami transaction and also includes proceeds from such property.

Benami transaction encompasses where a property is transferred to, or is held by, a person and the consideration for such property has been provided, or paid by, another person ( the trustees and wife, children, brother or sister to whom property has been transferred from known resources will be excluded);

A transaction or arrangement in respect of a property carried out or made in a fictitious name; or a transaction or arrangement in respect of a property where the owner of the property is not aware of, or denies knowledge of, such ownership; or a transaction or arrangement in respect of a property where the person providing the consideration is not traceable or is fictitious.

The potential types of Benami properties include plots, houses, shopping plazas, shops, housing schemes, bank accounts, vehicles, business shares, jewellery, foreign currency, legal documents and intangible properties having financial value.

During this period, sale, purchase and transfer of property will be banned till further orders.

Appeal against the decision of Adjudication Authority can be lodged with the Federal Tribunal and after the decision of the Federal Tribunal such properties will be confiscated and sold out by the federal government.

Furthermore, if the crime of Benami transactions proved, criminal proceedings will be initiated against accused persons and where proven guilty, rigorous imprisonment of one year to seven years can be awarded to such persons. Similarly, persons providing false and baseless information can also be sentenced to rigorous imprisonment of six months to five years.

In this regard, the whistleblowers will be entitled to a cash reward for providing credible information leading to detection of Benami property or transaction. If property is worth Rs.2,000,000 or less, five percent of price of Benami property will be given to informer.

If property’s worth is more than Rs.2,000,000 or 5,000,000, four percent of Benami property will be given to informer and where the value of property will be more than Rs.5,000,000, three percent of Benami property will be given to informer.

It is clarified that this reward will be given only if the information provided is of value and FBR doesn’t already have it and the information was not available in public records and appeal against confiscation of property has attained finality.

March 20, 2019
Rupee eases against dollar in early trading

KARACHI: The Pak Rupee eased slightly against US dollar in early day trading on Wednesday despite demand for import and corporate payments.

The dollar is being traded at Rs139.40 in interbank foreign exchange market. The foreign currency market was ended at Rs139.39 a day earlier.

Currency experts said that the local currency was under pressure for the last few days due to the government affirmation for new loan negotiation with the IMF.

The experts said that value of the local unit might rebound with the inflows of financial assistance from friendly countries.

March 20, 2019
Advance tax on sales to distributors, dealers and wholesalers

KARACHI: Federal Board of Revenue (FBR) has made manufacturers responsible for collecting advance tax on sales to distributors, dealers and wholesalers.

The tax has been imposed under Section 236G of Income Tax Ordinance, 2001.

Section 236G: Advance tax on sales to distributors, dealers and wholesalers

Sub-Section (1): Every manufacturer or commercial importer of electronics, sugar, cement, iron and steel products, fertilizer, motorcycles, pesticides, cigarettes, glass, textile, beverages, paint or foam sector, at the time of sale to distributors, dealers and wholesalers, shall collect advance tax at the rate specified in Division XIV of Part IV of the First Schedule, from the aforesaid person to whom such sales have been made.

The rate of collection of tax under section 236G shall be as follows:-

Category of Sale Rate of Tax
Filer Non-Filer
Fertilizers 0.7 percent 1.4 percent
Other than Fertilizers 0.1 percent 0.2 percent

Sub-Section (2): Credit for tax collected under sub-section (1) shall be allowed in computing the tax due by the distributor, dealer or wholesaler on the taxable income for the tax year in which the tax was collected.

Section 236H: Advance tax on sales to retailers

Sub-Section (1): Every manufacturer, distributor, dealer, wholesaler or commercial importer of electronics, sugar, cement, iron and steel products, motorcycles, pesticides, cigarettes, glass, textile, beverages, paint or foam sector, at the time of sale to retailers, “and every distributor or dealer to another wholesaler in respect of the said sectors”, shall collect advance tax at the rate specified in Division XV of Part IV of the First Schedule, from the aforesaid person to whom such sales have been made.

The rate of collection of tax under section 236H on the gross amount of sales shall be as follows:-

Category of sale Rate of tax
Filer Non-Filer
(1) (2) (3)
Electronics 1 percent 1 percent
Others 0.5 percent

Sub-Section (2): Credit for the tax collected under sub-section (1) shall be allowed in computing the tax due by the retailer on the taxable income for the tax year in which the tax was collected.

Section 236HA: Tax on sale of certain petroleum products

Sub-Section (1): Every person selling petroleum products to a petrol pump operator or distributor, where such operator or distributor is not allowed a commission or discount, shall collect advance tax on ex-depot sale price of such products at the rate specified in Division XVA of Part IV of the First schedule.

The rate of collection of tax under section 236HA shall be 0.5 percent of ex-depot sale price for filers and 1 percent for non-filers.

Sub-Section (2): The tax deductible under sub-section (1) shall be a final tax on the income arising from the sale of petroleum products to which sub-section (1) applies.

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March 20, 2019
Engro Powergen successfully tests electricity generation

KARACHI: Engro Powergen Thar (Private) Limited (EPTL) has successfully tested and energized the first unit of 330MW of the combined 660MW coal based power plant – located in Thar Block II.

A statement on Tuesday said that the successful synchronization happened amidst presence of senior officials of the Company and from China Machinery Engineering Corporation (CMEC) – the EPC contractor of the project.

The injection of the electrons produced for the very first time from Thar coal – regarded as the 7th largest coal reserve in the world with 175 billion tons of lignite coal – has redefined Pakistan’s energy landscape and secured the country’s energy future on an indigenous, native footing which will eventually relinquish Pakistan’s dependence on foreign fuel mix.

EPTL – one of the early harvest projects of the China Pakistan Economic Corridor (CPEC) – commenced the construction of Pakistan’s first 660MW power plant after the financial close of the project in April 2016.

EPTL operates as a subsidiary of Engro Energy along with other sponsors that include HBL; Liberty and China Machinery Engineering Corporation.

The synchronization of the first unit of the power plant is a considerable achievement given that the project has been constructed in a record time of under 3 years – as per schedule and projected costs, a feat in itself given the complexity of the project.

EPTL power plant will utilize 3.8MTPA of coal supplied by Sindh Engro Coal Mining Company as both projects achieve their commercial operations date (COD) in June 2019.

Together both the mining and power projects, managed by Engro Energy, will be able to bring average foreign exchange savings of up to $1.6 billion per annum thereby delivering on Company’s promise of producing electricity which is from indigenous resources; is abundantly available and is economical.

The 660 MW power plant of EPTL will use circulating fluidized bed (CFB) technology to burn coal.

Post-COD, the plant will evacuate 660MW of electricity through a 282-km long 500 kV Double Circuit Quad-Bundle transmission line from EPTL plant to Matiari in Sindh province.

The power plant – although first for Pakistan to run on Thar coal – complies with all local environmental laws and has voluntarily adopted various international compliance standards.

Celebrating this transformational event, the President of Engro Corporation, Ghias Khan said: “The first sync of the power plant on Thar coal is truly a momentous occasion for entire Pakistan.

“Engro’s commitment to the Thar coal project goes back almost a decade when we entered into a public private partnership in 2009.

“The synchronization of the first unit of the 660MW power plant is both testament to Engro’s capacity to engineer excellence and deliver on this project of national importance which will ensure the energy security of the county.

“At this juncture, I would like to thank the Government of Sindh and the Federal Government for their catalytic role and support in helping us deliver on our commitments of the Thar coal projects.”

Commenting on the landmark achievement, Ahsan Zafar Syed – the Chief Executive Officer of Engro Energy and EPTL said: “This is a historic moment for us where Engro has not only delivered on its promise of realizing the Thar dream but technically demonstrated proof of the concept that Thar coal is suited to produce indigenous energy which can prove to be economical in the long run and reduce our dependence on imported fuel mix.

“I would like to acknowledge the efforts of our partners and sponsors in the project who have played an instrumental role in this landmark achievement. I am confident that together with all our partners, Engro will forge ahead with synchronization of the second unit of the 660 MW power plant in April 2019 and Insha-Allah achieve the COD of both the mining and the power project, as per our commitment, in June 2019.”

Syed Abul Fazal Rizvi, CEO of Sindh Engro Coal Mining Company (SECMC), congratulated all the partners and teams involved in this achievement and said: “I congratulate the EPTL management on successful energization of the first unit of the plant.

“Sindh Engro Coal Mining Company (SECMC) has already commenced the delivery of coal to the EPTL plant and we will now further optimize the mine to deliver on our promise of providing economical, indigenous energy to Pakistan.”

March 20, 2019