Pkrevenue.com

Month: April 2020

  • IMF approves $1.38 billion for Pakistan to address economic impact of COVID-19 shock

    IMF approves $1.38 billion for Pakistan to address economic impact of COVID-19 shock

    KARACHI:  The Executive Board of the International Monetary Fund (IMF) approved the disbursement of $1.386 billion under the Rapid Financing Instrument to address the economic impact of the Covid-19 shock, according to statement received here late Thursday.

    With the near-term outlook deteriorating sharply, the authorities have swiftly put in place measures to contain the impact of the shock and support economic activity. Crucially, health spending has been increased and social support strengthened, it added.

    As the impact of the COVID-19 shock subsides, the authorities’ renewed commitment to implement the policies in the existing EFF will help support the recovery and strengthen resilience.

    The Executive Board of the International Monetary Fund (IMF) approved a purchase of Pakistan under the Rapid Financing Instrument (RFI) equivalent to SDR 1,015.5 million (US$ 1.386 billion, 50 percent of quota) to meet the urgent balance of payment needs stemming from the outbreak of the COVID-19 pandemic.

    While uncertainty remains high, the near-term economic impact of COVID-19 is expected to be significant, giving rise to large fiscal and external financing needs. The IMF support will help to provide a backstop against the decline in international reserves and provide financing to the budget for targeted and temporary spending increases aimed at containing the pandemic and mitigating its economic impact.

    The IMF remains closely engaged with the Pakistani authorities and as the impact of the COVID-19 shock subsides will resume discussions as part of the current EFF.

    Following the Executive Board discussion, Geoffrey Okamoto, First Deputy Managing Director and Acting Chair, made the following statement:

    “The outbreak of Covid-19 is having a significant impact on the Pakistani economy. The domestic containment measures, coupled with the global downturn, are severely affecting growth and straining external financing. This has created an urgent balance of payments need.

    “In this context of heightened uncertainty, IMF emergency financing under the Rapid Financing Instrument provides strong support to the authorities’ emergency policy response, preserving fiscal space for essential health spending, shoring up confidence, and catalyzing additional donor support.

    “In response to the crisis, the government of Pakistan has taken swift action to halt the community spread of the virus and introduced an economic stimulus package aimed at accommodating the spending needed to tackle the health emergency and supporting economic activity. Crucially, the authorities are increasing public health spending and strengthening social safety net programs to provide immediate relief to the most vulnerable. Similarly, the State Bank of Pakistan has adopted a timely set of measures, including a lowering of the policy rate and new refinancing facilities, to support liquidity and credit conditions and safeguard financial stability. In this context, the authorities’ policies should be targeted and temporary.

    “As the crisis abates, the authorities’ renewed commitment to the reforms in the existing Extended Fund Facility—in particular those related to fiscal consolidation strategy, energy sector, governance, and remaining AML/CFT deficiencies—will be crucial to entrench resilience, boost Pakistan’s growth potential, and deliver broad based benefits for all Pakistanis.

    “Expeditious donor support is needed to close the remaining balance of payments gap and ease the adjustment burden.”

  • SRB extends date for filing sales tax return up to April 30

    SRB extends date for filing sales tax return up to April 30

    KARACHI: Sindh Revenue Board (SRB) on Thursday extended the last date for filing sales tax returns for the month of March up to April 30, 2010 to facilitate taxpayers in the wake of ongoing lockdown to prevent coronavirus outbreak.

    The SRB issued a circular to extend the date for filing sales tax return for month of March 2020 up to April 30, 2020 from the exiting due date of April 18, 2020.

    The SRB also extended the date for payment of sales tax on services for the month of March 2020 up to April 27, 2020 from April 15, 2020,

    The Karachi Tax Bar Association (KTBA) requested the provincial tax authority to extend the date for filing monthly returns.

    The tax bar said that due to ongoing lockdown for prevention of coronavirus outbreak, the grant of date extension would help the taxpayers in discharging their liabilities.

  • Tax collection from phone services jumps up 630 percent

    Tax collection from phone services jumps up 630 percent

    ISLAMABAD: The collection of withholding tax from phone subscribers registered a phenomenal increase of 630 percent to Rs27 billion during first half of the current fiscal year, according to data made available to PkRevenue.com

    The sources in Federal Board of Revenue (FBR) told that the restoration of withholding tax on phone usage by the Supreme Court of Pakistan (SBP) helped the tax authorities to generate substantial amount during the period under review.

    The data revealed that the FBR collected withholding tax to the tune of Rs27 billion during first six months (July – December) 2019/2020 as compared with Rs3.7 billion collection in the corresponding period of the last fiscal year.

    The FBR collects withholding tax on telephone usage under Section 236 of Income Tax Ordinance, 2001 from telephone subscribers and internet.

    The tax rate is zero percent on monthly bill up to Rs1,000. However the bill exceeding Rs1,000 shall liable to tax rate at 10 percent.

    In case subscriber of internet, mobile telephone and pre-paid internet or telephone card the tax rate shall be 12.5 percent of the amount of bill or sales price of internet pre-paid card or prepaid telephone card or sale of units through any electronic medium or whatever form.

    The phone companies preparing bills or selling prepaid cards are responsible to collect withholding tax on behalf of the FBR from telephone subscribers, internet subscribers, purchaser of internet prepaid cards.

    The withholding tax collected from phone usage is adjustable against the taxpayers’ liability.

    The FBR incurred a loss of Rs55 billion in 2018/2019 due to suspension of withholding tax on telecommunication services by the Supreme Court of Pakistan.

  • FBR amends list for exemption on equipment for coronavirus prevention

    FBR amends list for exemption on equipment for coronavirus prevention

    In a continued effort to combat the COVID-19 pandemic, the Federal Board of Revenue (FBR) has issued an updated list of duty and tax-exempt items crucial for the prevention and control of the virus.

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  • FBR exempts withholding tax on commission for Ehsaas Program

    FBR exempts withholding tax on commission for Ehsaas Program

    ISLAMABAD: Federal Board of Revenue (FBR) has exempted the withholding tax on commission agent for disbursement of Ehsaas Emergency Program.

    The FBR issued SRO 315(I)/2020 dated April 16, 2020 to make amendment to Second Schedule of Income Tax Ordinance, 2001.

    According to the amendment, a new clause 102A inserted to Part IV of the Second Schedule, which stated: “The provisions of Section 233 shall not apply to commission received by a retail branchless banking agent on any amount disbursed by the Ehsaas Emergency Cash Transfer Program for the period commencing on the date of issuance of this notification and ending on the 30th day of June, 2020.”

    The Section 233 of the Income Tax Ordinance, 2001 explains application of withholding tax on brokerage and commission.

    Where any payment on account of brokerage or commission is made by the Federal Government, a Provincial Government, a Local Government, a company or an association of persons constituted by, or under any law (hereinafter called the “principal”) to a person (hereinafter called the “agent”), the principal shall deduct advance tax at the rate specified in Division II of Part IV of the First Schedule from such payment.

    If the agent retains Commission or brokerage from any amount remitted by him to the principal, he shall be deemed to have been paid the commission or brokerage by the principal and the principal shall collect advance tax from the agent.

  • SBP cuts policy rate to 9pc to dilute coronavirus impact on growth, employment

    SBP cuts policy rate to 9pc to dilute coronavirus impact on growth, employment

    KARACHI: State Bank of Pakistan (SBP) on Thursday reduced key policy rate by 200 basis points to nine percent to cushion the impact of coronavirus shock on growth and employment.

    (more…)
  • Foreign exchange reserves increase to $17.295 billion

    Foreign exchange reserves increase to $17.295 billion

    KARACHI: Pakistan’s foreign exchange reserves have increased by $307 million to $17.295 billion by week ended April 10, 2020.

    A week ago the foreign exchange reserves were at $16.988 billion, the State Bank of Pakistan (SBP) said on Thursday.

    The officials foreign exchange reserves of the central bank increased by $252 million to $10.974 billion by week ended April 10, 2020 as compared with $10.722 billion a week ago.

    Similarly, the foreign exchange reserves held by commercial banks increased by $55 million to $6.321 billion by week ended April 10, 2020 as compared with $6.266 billion a week ago.

  • Share market gains 87 points in range bound activity

    Share market gains 87 points in range bound activity

    KARACHI: The share market gained 87 points on Thursday after trading in range bound during the day.

    The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 31,330 points as against 31,242 points showing an increase of 87 points.

    Analysts at Arif Habib Limited said that the market traded in a narrow range today between +205 points and -226 points, and closing the session +87 points.

    Yesterday’s PIB auction that resulted in normalization of yield curve and declining of yields gave good reasons for investors to come back to equities.

    However, weakening oil fundamentals kept the investors in limbo on whether to book profit or take new positions.

    Similar to yesterday’s performance, Fertilizer sector maintained the momentum with further support from Cement and E&P sectors.

    Banking sector, on the other hand, faced selling pressure, bearing the brunt from foreign investors in past couple of sessions.

    Cement sector managed to post some recovery today and maintained top position in trading volumes with 34.6 million shares, followed by Chemical (12.9 million) and Vanaspati (10.9 million).

    Among scrips, MLCF topped the volumes with 14.8 million shares, followed by UNITY (10.9 million) and HASCOL (7.2 million).

    Sectors contributing to the performance include E&P (+39 points), Tobacco (+31 points), Pharma (+25 points), Inv Banks (+23 points), Power (+16 points), Banks (-57 points) and Insurance (-12 points).

    Volumes declined from 185.6 million shares to 119.1 million shares (-36 percent DoD). Average traded value also declined by 36 percent to reach US$ 28.5 million as against US$ 44.8 million.

    Stocks that contributed significantly to the volumes include MLCF, UNITY, HASCOL, EPCL and PIOC, which formed 36 percent of total volumes.

    Stocks that contributed positively to the index include PAKT (+24 points), DAWH (24 points), OGDC (+18 points), FFC (+17 points) and COLG (+15 points). Stocks that contributed negatively include MCB (-23 points), HBL (-20 points), LUCK (-11 points), UBL (-11 points), and EFERT (-11 points).

  • Rupee gains 10 paisas on inflows

    Rupee gains 10 paisas on inflows

    KARACHI: The Pak Rupee gained 10 paisas against dollar on Thursday owing to inflows of export receipts and measures to facilitate home remittances.

    The rupee ended Rs166.88 to the dollar from previous day’s closing of Rs166.98 in interbank foreign exchange market.

    Currency dealers said that the rupee appreciated on inflows of export receipts during the day.

    Further, incentive scheme of State Bank of Pakistan (SBP) for promotion of home remittances also improved market sentiments.

    A day earlier, the SBP expanded incentive scheme for exchange companies for promoting home remittances through formal channels.

    The SBP previously on December 06, 2019 introduced the incentive scheme on which exchange companies were allowed market expenses reimbursement of Re. 1 per each incremental US dollar mobilized over 15 percent growth.

    The SBP in this regard decided that with immediate effect the existing incentive scheme for marketing of home remittances i.e. Re 1 against US Dollar 01 of remittance amount beyond 15 percent growth over last year may now be based on tiered growth i.e. Rs. 0.50 on 5 percent growth, Rs. 0.75 on 10 percent growth and Rs. 1.00 on 15 percent growth.

    Through another circular issued to authorized dealers in foreign exchange and microfinance banks, the SBP said that it has been decided with immediate effect that the prevailing rate of TT charges may be enhanced from SAR 10/- to SAR 20/- for transactions between USD 100-200.

    The SBP further said that the existing Incentive scheme for marketing of home remittances i.e. PKR 01 against USD 01 of remittance amount beyond 15 percent growth over last year may now be based on tiered growth i.e. Rs. 0.50 on 5 percent growth, Rs. 0.75 on 10 percent growth and Rs. 1.00 on 15 percent growth.

  • Why non-filers happy in paying high withholding tax rates, FPCCI asks FBR

    Why non-filers happy in paying high withholding tax rates, FPCCI asks FBR

    KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has expressed concerns over lower number of return filers and asked Federal Board of Revenue (FBR) to identify reasons that why non-filers happy in paying higher rate of withholding tax.

    According to a statement on Thursday, the FPCCI has finalize proposals for upcoming budget 2020/2021.

    The proposals have been drafted keeping in view of the objectives of (i) Revamping Taxation System (ii) Documentation of Economy (iii) Employment generation through Industrialization (iv) Promoting a responsive and equitable Taxation System (v) Infrastructure Development (vi) Trickledown effect of the fiscal space to the grass root level etc., and would be submitted to the concerned quarters within fortnight”.

    This was stated by Mian Anjum Nisar, President, FPCCI and Zakaria Usman, Convener of the FPCCI Budget Advisory Council.

    Elaborating the methodology of the budget proposals exercise, they stated that the FPCCI with a consistent commitment to developing and promoting a modern, responsive and equitable taxation system, has formulated these proposals on the basis of impartial, unbiased and transparent manner after taking a painstaking lengthy process which involved incorporating feedback received on matters related to revenue and taxation throughout the year from our members located across the country and input obtained from our member trade bodies, stakeholders, tax practitioners, knowledgeable people etc., through invitation of proposals, organizing workshops and holding a series of Budget Advisory Council meetings wherein these proposals were discussed in detail and some contradictory proposals were re-examined and final proposals were redesigned in line with the best interest of the country.   

    They informed that the FPCCI Budgetary document consists of three Volumes – Vol-I discusses issues / solution of macroeconomic nature ; Vol-II contains policy issues relevant to Taxation (Sales Tax, FED, Income Tax and Customs) ; while Vol-III contains Industry Specific Proposals received from FPCCI members .

    Moreover, the FPCCI would also submit its proposals to meet the challenges being faced by the trade & industry due to outbreak of COVID-19 as its severe and adverse impacts on various aspects of Pakistan’s economy is quite discern which may lead to negative growth rate, deterioration in current and fiscal balance, disruption in supply chain, increased unemployment etc.

    The FPCCI Chief Mian Anjum Nisar added, “The Macro Economic proposals contains long term action plan to boost exports ; promotion of Branding ; Enhancing SMEs sector ; Monetary Policy ; Creating Employment Opportunities through industrialization ; Taxpayers Bill of Rights ; Independent Tax Judicial System etc”.

    Zakaria Usman, Convener of the Budget Advisory Council disclosed, “In Direct Taxes, it has proposed to the Federal Board of Revenue (FBR) to reduce the tax rates to help increase competitive edge of indigenous products in both local and global markets; broadening of tax base; curtail parallel economy etc., as high tax rates provide incentives for tax evasion and corruption and results in high cost of doing business.

    At present the total numbers of NTN holders in Pakistan are over 4 million, however, the FBR has miserably failed to obtain return of income from such NTN holders and increase the number of active taxpayer during the last decade.

    They added that according to a study, 2.1 million Pakistanis (individuals) filed income tax returns in 2006-07 which shows that FBR during the last 14 years could not fetch much tax filers, despite prescribing higher withholding tax rates for non-filers”.

     “This underscores the need that FBR should conduct a study to find out what has gone wrong that even after penalizing the non-filers, they are happy to pay more by way of advance tax instead of filing returns”.

    He proposed that it is desirable that measures should be taken to facilitate to those, who are already existing taxpayers and contributing in the national tax pool in all manners, so that they become goodwill ambassador for FBR.

    “Resultantly, since many years, the registered taxpayers are less than 1 percent of the population of our country, which need to be enhanced”, he concluded.