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Month: May 2019

  • OMCs sales sharply decline by 25pc in 10 months

    OMCs sales sharply decline by 25pc in 10 months

    KARACHI: The sales of Oil Marketing Companies (OMCs) massively declined by 25 percent during first ten months (July – April) of current fiscal year owing to slowdown in economic activities.

    The sales of OMCs fell to around 15.28 million tons during July – April 2018/2019 as compared with 20.4 million tons in the same period of the last fiscal year.

    Analysts at Topline Securities attributed the massive fall in sales to slowdown in economic activities and sharp decline in furnace oil.

    They said that Pakistan OMCs sales continued to suffer, where volumetric sales for April 2019 nosedived 16 percent YoY on back of 33 percent YoY lower furnace oil volumes and decline in high speed diesel volumes by 18 percent YoY.

    FO sales continued to feel pinch amid availability of RLNG/Coal for power generation. While, HSD volumes are down on YoY basis due to slowdown in economic activities.

    Petrol sales touched 20-Month high (in absolute terms), +2 percent YoY vs. +17 percent YoY in April 2018.

    Lower growth in MS could be attributed to increase in its prices by around 15 percent YoY coupled with overall slowdown in economy.

    In MS oil segment, PSO witnessed increase in market share by 4.3ppts YoY to 39.6 percent, while Hascol share has declined by 8.3ppts YoY to 7 percent as the company has changed its focus from higher volumes to higher margins.

    Similarly, unlisted player GNO gained 3.4ppts YoY in its market share.

    On HSD front, Hascol has lost 7.5ppts YoY in its market share to 7.1 percent, while GNO has gained 7.5ppts YoY and now commands 12 percent of the market.

  • Meeting reviews progress on FATF Action Plan

    Meeting reviews progress on FATF Action Plan

    ISLAMABAD: Dr. Abdul Hafeez Shaikh, Adviser to Prime Minister on Finance, Revenue and Economic Affairs on Monday chaired a meeting to review progress on Financial Action Task Force (FATF) Action Plan.

    The Secretary Finance updated all the key stakeholders on the critical nature of the meeting, serious challenges at hand and top priority that is being assigned by the government.

    The chair was updated by all the key stakeholders regarding progress made by Pakistan on FATF Action Plan.

    The stakeholders demonstrated coordination and commitment to achieve this national objective.

    The finance adviser advised all stakeholders to work round the clock and give highest priority, efforts as well as extra time for achieving and surpassing to FATF action plan.

    The meeting was attended by Secretary Finance, Secretary Interior, Chairman FBR, Chairman SECP, Deputy Governor SBP, Director General FMU, Director General CT Ministry of Foreign Affairs, Director General CT NACTA and representatives of Law enforcement and intelligence agencies.

    Earlier in February 2019 meetings of Financial Action Task Force (FATF) took place at OECD, Paris to review the compliance of a number of countries with the international standards on Anti-Money Laundering and Counter Financing of Terrorism (AML-CFT).

    Pakistan was earlier placed by FATF in its Ongoing Compliance Document in view of an Action Plan undertaken by it to strengthen its CFT Regime.

    The FATF reviewed the progress made by Pakistani authorities concerned with CFT role, based upon an analysis carried out by Asia-Pacific Joint Group.

    The FATF noted that Pakistan took several steps to implement the Action Plan including by undertaking Risk Assessment of Terrorism Financing and Cash Smuggling in the country.

    The FATF advised Pakistan for continue work on action plan, included:

    (1) adequately demonstrating its proper understanding of the TF risks posed by the terrorist groups above, and conducting supervision on a risk-sensitive basis;

    (2) demonstrating that remedial actions and sanctions are applied in cases of AML/CFT violations, and that these actions have an effect on AML/CFT compliance by financial institutions;

    (3) demonstrating that competent authorities are cooperating and taking action to identify and take enforcement action against illegal money or value transfer services (MVTS);

    (4) demonstrating that authorities are identifying cash couriers and enforcing controls on illicit movement of currency and understanding the risk of cash couriers being used for TF;

    (5) improving inter-agency coordination including between provincial and federal authorities on combating TF risks;

    (6) demonstrating that law enforcement agencies (LEAs) are identifying and investigating the widest range of TF activity and that TF investigations and prosecutions target designated persons and entities, and persons and entities acting on behalf or at the direction of the designated persons or entities;

    (7) demonstrating that TF prosecutions result in effective, proportionate and dissuasive sanctions and enhancing the capacity and support for prosecutors and the judiciary; and

    (8) demonstrating effective implementation of targeted financial sanctions (supported by a comprehensive legal obligation) against all 1267 and 1373 designated terrorists and those acting for or on their behalf, including preventing the raising and moving of funds, identifying and freezing assets (movable and immovable), and prohibiting access to funds and financial services;

    (9) demonstrating enforcement against TFS violations including administrative and criminal penalties and provincial and federal authorities cooperating on enforcement cases;

    (10) demonstrating that facilities and services owned or controlled by designated person are deprived of their resources and the usage of the resources.

    The FATF urged Pakistan to swiftly complete its action plan, particularly those with timelines of May 2019.

  • KSE-100 index falls by 518 points on upcoming MSCI review

    KSE-100 index falls by 518 points on upcoming MSCI review

    KARACHI: The stock exchange fell by 518 points on Monday owing to upcoming MSCI review and reports of tax laden budget.

    The benchmark KSE-100 index of Pakistan Stock Exchange closed at 35,605 points as against 36,123 points showing a decline of 518 points.

    Market continued negative drive today amidst issues like MSCI review on May 13th, impending tough budget, possibility of policy rate hike by SBP by month end and pending IMF package.

    Volumes were driven by Cement Sector that couldn’t find solution of sales quota and declining sales volume.

    Market volumes have been anemic since last week, which was the case even today. All shares index registered a volume of 71M shares, with Cement Sector leading the index (14.7M shares), followed by Banks (11.7M) and Engineering (6M).

    Steel scrips traded at and close to lower circuit. Among scrips, MLCF topped the chart with 6.4M shares followed by BOP (5.7M). market closed near day’s low of 553 points.

    Sectors contributing to the performance include E&P (-117 points), Banks (-99 points), Cement (-72 points), Fertilizer (-71 points) and Power (-51 points).

    Volumes improved slightly from 64mn shares to 71mn shares (11 percent DoD). Average traded value also increased by 8 percent to reach US$ 22.4mn as against US$ 20.65mn.

    Stocks that contributed significantly to the volumes include MLCF, BOP, UNITY, FCCL and UBL, which formed 31 percent of total volumes.

    Stocks that contributed positively include COLG (+12 points), BAFL (+8 points), AGIL (+4 points) and DAWH (+4 points). Stocks that contributed negatively include PPL (-58 points), LUCK (-44 points), ENGRO (-42 points), UBL (-37 points) and HUBC (-32 points).

  • Shabbar Zaidi appointed as 26th FBR chairman

    Shabbar Zaidi appointed as 26th FBR chairman

    The federal government has appointed Shabbar Zaidi as the Chairman of the Federal Board of Revenue (FBR). This significant announcement, made by Prime Minister Imran Khan during a media interaction on Monday, marks a departure from tradition as Zaidi becomes the first chairman selected from the private sector.

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  • Rupee makes gain against dollar on inflows

    Rupee makes gain against dollar on inflows

    KARACHI: The rupee gained against dollar on Monday after sufficient inflows were available in the market.

    The rupee gained three paisas to end at Rs141.29 against dollar from last Friday closing of Rs141.32 in interbank foreign exchange market.

    The interbank foreign exchange market was initiated in the range of Rs141.20 and Rs141.25.

    The market recorded day high of Rs141.36 and low of Rs141.15 and closed at Rs141.29.

    The exchange rate in open market also witnessed appreciation in rupee value by 30 paisas against dollar.

    The buying and selling of dollar was recorded at Rs141.00/Rs141.50 from last Saturday’s closing of Rs141.30/Rs141.80 in cash ready market.

  • Withholding tax rates on payment for goods and services during Tax Year 2019

    Withholding tax rates on payment for goods and services during Tax Year 2019

    KARACHI: Federal Board of Revenue (FBR) has updated withholding tax card for tax year 2019 amendment through Finance Supplementary (Second Amendment) Act, 2019.


    Following are the withholding tax rates applicable on payment for goods and services under Section 153 of Income Tax Ordinance, 2001.


    Under this section every withholding agent prescribed under the ordinance shall collect withholding tax from resident person, and permanent establishment in Pakistan of a non-resident at the time the amount is actually paid.


    The withholding tax rates under Section 153(I)(a):


    For sale of rice, cotton seed oil and edible oil the tax rate shall be 1.5 percent of gross amount.


    Supply made by distributors of fast moving consumer goods shall be 2 percent of gross amount in case of company and 2.5 percent of gross amount in case of other than company.


    For sale of any other goods:


    (i) in the case of company the filer of income tax return shall pay 4 percent and the rate of withholding tax shall be 8 percent for non-filer.


    (ii) In the case of other than companies the tax rate for filer shall be 4.5 percent and 9 percent for non-filer.


    The FBR said that no deduction of tax where payment is less than Rs75,000 in aggregate during a financial year.


    The withholding tax rate for transport services under Section 153(1)(b) shall be two percent.


    All others under the section shall be:


    (i) in the case of companies the filer shall pay 8 percent and 14.5 percent for non-filer.


    (ii) in all other than company taxpayers the withholding tax shall be 10 percent for filer and 17.5 percent for non-filer.


    (iii) Person making payment to electronic and print media for advertising services: filer shall pay 1.5 percent; non-filer shall pay 12 percent; and non-filer other than company shall pay 15 percent.


    The FBR said that no deduction of tax where payment is less than Rs30,000 in aggregated during a financial year.


    The rate of withholding tax on execution of contracts under Section 153(1)(c) shall be:


    (i) in case of sportsperson the rate shall be 10 percent


    (ii) in the case of companies the withholding tax rate for filers shall be 7 percent and 14 percent for non-filers.


    (iii) In the case of other than companies the rte of withholding tax shall be 7.5 percent for filers and 15 percent for non-filers.


    Every exporters or export house shall deduct tax on payments in respect of services of stitching, dying, printing etc. received or provided under Section 153(2) the withholding tax rate shall be one percent.


  • Sales Tax Act 1990: No suit shall lie against government servant

    Sales Tax Act 1990: No suit shall lie against government servant

    KARACHI: The sales tax law had explained that no suit, prosecution or other legal proceeding shall lie against the federal government or against any public servant in respect of any order passed in good faith.

    The updated Sales Tax Act, 1990 issued by the Federal Board of Revenue (FBR) explained the bar of suits, prosecution and other legal proceedings under this act.

    Section 51: Bar of suits, prosecution and other legal proceedings

    Sub-Section (1): No suit shall be brought in any Civil Court to set aside or modify any order passed, any assessment made, any tax levied, any penalty imposed or collection of any tax made under this Act.

    Sub-Section (2): No suit, prosecution or other legal proceeding shall lie against the Federal Government or against any public servant in respect of any order passed in good faith under this Act.

    Sub-Section (3): Notwithstanding anything in any other law for the time being in force, no investigation or inquiry shall be undertaken or initiated by any governmental agency against any officer or official for anything done in his official capacity under this Act, rules, instructions or direction made or issued thereunder without the prior approval of the Board.

    Section 52: Appearance by authorized representative

    A registered person required to appear before the Appellate Tribunal or an officer of 2[Inland Revenue] in connection with any proceedings under this Act may, in writing, authorize any person having such qualification as may be prescribed to represent him or appear on his behalf.

    Section 52A: e-intermediaries to be appointed

    Sub-Section (1): Subject to such conditions, limitations and restrictions, the Board may, by a notification in the official Gazette, appoint a person to electronically file return under Chapter V and such other documents electronically, as may be prescribed from time to time, on behalf of a person registered under section 14.

    Sub-Section (2): A person registered under section 14 may authorize an e-intermediary to electronically file return or any other documents, as specified in sub-section (1).

    Sub-Section (3): The return or such other documents filed by an e-intermediary on behalf of a registered person shall be deemed to have been filed by that registered person.

    Sub-Section (4): Where this Act requires anything to be done by the registered person and if such thing is done by an e-intermediary authorized by the registered person under sub-section (2), unless the contrary is proved, shall be deemed to have been done with the knowledge and consent of such registered person so that in any proceedings under this Act, the registered person shall be liable as if the thing has been done by him.

    Sub-Section (5): Where an e-intermediary, authorized by a registered person under sub-section (2) to act on his behalf, knowingly or willfully submits a false or incorrect information or document or declaration with an intent to avoid payment of tax due or any part thereof or claiming a tax credit or a refund that is not due to the registered person, such e-intermediary shall be jointly and severally responsible for recovery of the amount of tax short paid or the amount refunded in excess as a result of such incorrect or false information or document or declaration, without prejudice to any other action that may be taken against him under the relevant provisions of the law.

    Sub-Section (6): The Board may, by notification in the official Gazette, prescribe rules for the conduct and transaction of business of e- intermediaries, including their appointment, suspension and cancellation of appointment, subject to such conditions as specified therein.

    Section 53: Estate of deceased person

    The tax liability of a deceased registered person under the Act shall be the first charge on his estate in the hands of his successors.

    Section 54: Estate in bankruptcy

    Sub-Section (1): If a registered person is declared bankrupt, the tax liability under this Act shall pass on to the estate in bankruptcy if it continues to operate the business.

    Sub-Section (2): If tax liability is incurred by an estate in bankruptcy, the tax is deemed to be a current expenditure in the operations of the estate in bankruptcy and shall be paid before the claims preferred by other creditors are settled.

  • FBR provisionally revokes sales tax registration suspension of Hascol Petroleum

    FBR provisionally revokes sales tax registration suspension of Hascol Petroleum

    KARACHI: Federal Board of Revenue (FBR) has provisionally revoked the suspension of sales tax registration of M/s. Hascol Petroleum Limited on directives issued by Sindh High Court.

    A communication sent to Pakistan Stock Exchange (PSX) said that the company had filed a constitution petition before the Sindh High Court against the FBR challenging the order issued by Large Taxpayers Unit (LTU) Karachi for suspension of sales tax registration of the company.

    “Upon directors of the Sindh High Court, the commissioner Inland Revenue, FBR has by order May 03, 2019 provisionally revoked the suspension of the sales tax registration of the company with immediate effect,” the company said, adding that consequently the sales tax registration of the company is operative and effective as of date.

  • Reza Baqir assumes charge as SBP governor

    Reza Baqir assumes charge as SBP governor

    KARACHI: Dr. Reza Baqir assumed the charge of Governor State Bank of Pakistan (SBP) on Sunday after President of Pakistan appointed him as Governor State Bank of Pakistan for a period of three years.

    A statement issued by the SBP said that Dr. Reza Baqir has eighteen years of experience with the IMF and two years with the World Bank.

    He was the Head of the IMF’s Office in Egypt and Senior Resident Representative since August 2017.

    He has also held positions as IMF Mission Chief for Romania and Bulgaria, Division Chief of the IMF’s Debt Policy Division, Head of the IMF delegation to the Paris Club, Deputy Division Chief of the IMF’s Emerging Markets Division, IMF Resident Representative to the Philippines, and numerous other positions.

    Dr. Baqir’s research has been published in top journals of the economics profession, including the Journal of Political Economy and the Quarterly Journal of Economics.

    Dr. Baqir holds a Ph.D in Economics from the University of California at Berkeley and an A.B. (Magna cum Laude) in Economics from Harvard University.

  • PSX proposes reducing withholding tax to 2.5pc on income from margin financing transactions

    PSX proposes reducing withholding tax to 2.5pc on income from margin financing transactions

    KARACHI: Pakistan Stock Exchange (PSX) has recommended the tax authorities to reduce the withholding tax to 2.5 percent from 10 percent to develop the market and increase tax collection.

    In its budget proposals for 2019/2020, the stock market said that the proposed reduction in the rate of tax on margin financing transactions would help develop market and increase tax collection by Federal Board of Revenue (FBR) because 10 years back the size of similar market for margin transactions was several time higher.

    The PSX said that margin financing facility is made available to all members against net ready market purchases of their clients and proprietary positions.

    The National Clearing Company of Pakistan Limited (NCCPL) provides a system to margin financing participants for recording and settlement of margin financing transactions, with financing terms and conditions pre-determined by the margin financee and margin financier.

    Margin financing facility is made available only in eligible securities notified by the Securities and Exchange Commission of Pakistan (SECP).

    The PSX said that the present tax rate on gross income of the financier is 10 percent without deduction of any expenditure to earn such income.

    In most cases the funds are borrowed from financial institutions for such margin financing transactions, it added.

    The cost involved in margin financing includes financing cost payable to financial institution, trading, clearing and depository charges and other administrative cost which render that the amount deducted as advance tax could not be fully adjusted against the tax liability of most brokers leading towards claims for tax refunds that are not time bound.

    For the purpose of reducing withholding tax, the PSX proposed amendment to Division IIB of Part IV, First Schedule to Income Tax Ordinance, 2001 as: “The rate of deduction under section 233A shall be 2.5 percent of profit or mark-up or interest earned by the member, margin financier or securities lender.”