Pkrevenue.com

Month: April 2020

  • Karachi Chamber advocates unregistered transactions

    Karachi Chamber advocates unregistered transactions

    KARACHI: Karachi Chamber of Commerce and Industry (KCCI) reiterated demand for eliminating condition of Computerized National Identity Card (CNIC) and allow unregistered persons to make purchases freely.

    KCCI President Agha Shahab Ahmed Khan in a statement on Monday urged the government to immediately waive CNIC requirement for sales to unregistered persons and three percent further tax in order to revive the economic activities and business transactions.

    In a letter sent to PM’s Advisor on Finance & Revenue Dr. Abdul Hafeez Shaikh, President KCCI said that waiver of CNIC condition and 3 percent Further Tax would result in release of major stockpiles of commodities and consumer goods into the markets and revenue collection will improve through liberalization of transactions.

    “Small and Medium Industry will also benefit as a result of such measure because a very large volume of raw materials is supplied to SMEs by commercial importers who are stuck with inventories. In order to stimulate the economy, an across the board relief is required rather than selective assistance to already favored sectors,” he added.

    President KCCI pointed out that in the Finance Act 2019, an amendment was made to Section 8 (Sub-Sec.1, Clause M) of Sales Tax Act, by addition of 10th Schedule, whereby it is mandatory to provide CNIC number of unregistered buyers in the invoice and Sales Tax Returns in addition to payment of 3 percent Further Tax. Similar statute has been added U/S.19A of Federal Excise Act, Sec.216A to Income Tax Ordinance and Sec.156A of Customs Act.

    He noted that since the number of registered persons in Sales Tax regime stood hardly at around 45,000 all over Pakistan, it is not possible for suppliers/ sellers and manufacturers to provide the CNIC of buyers on account of all their sales. This condition has resulted in a slowdown of business transactions and proliferation of cash economy.

    Agha Shahab said that the situation has further aggravated due to country-wide lockdown and disruption in supply chain due to the outbreak of coronavirus.  Consequently, stocks and inventories with importers, manufacturers and wholesalers are accumulating while recoveries from markets have completely stopped and a large number of bank defaults are likely to take place due to liquidity crunch.

    Unfortunately, while giving major relief to export sectors which hardly contributes 5 to 6 percent to GDP, the government has entirely ignored the larger sectors of industry and trade catering to domestic markets and contributing 94 percent to GDP and major part of tax revenue, he said, adding that it will prove to be detrimental for revenue collection by the FBR if the business transactions remain stalled while the government would surely miss the revenue targets and incur larger fiscal deficit as a result of imposition of CNIC provisions and 3 percent further tax.

    “Hence, as a relief measure, the requirement of CNIC for sales to unregistered persons and 3 percent Further Tax has to be waived immediately in order to revive the economic activities and business transactions”, Agha Shahab stressed.

  • IPPAC rejects allegations of power sector losses

    IPPAC rejects allegations of power sector losses

    KARACHI: Independent Power Producers Advisory Council (IPPAC) has rejected the allegations of power sector losses made through the inquire committee’s report submitted to the prime minister.

    In response to the recent reports appearing in media on the Inquiry Committee’s Report (Report) over alleged losses in the Power Sector, the IPPAC categorically rejected the allegations being attributed to such report.

    The reports appearing in the media makes unsubstantiated allegations against the Independent Power Producers (IPPs), accusing them of having unfair agreements, and misappropriation in tariff and fuel consumption rates.

    “Neither the IPPAC nor any IPP was consulted or approached in preparing of the Report or its contents. The allegations being levelled on the IPPs are ill-conceived, unfounded, baseless and disappointing, which is causing serious damage to our reputation.”

    The IPPs have given their sweat and blood for the development of Pakistan at a time when no one was willing to invest in the country. The IPPs have empowered an uncertain economy, which had not witnessed such a sizeable quantum of Foreign Direct Investment ever in the past, it said.

    It is important to highlight that while the Government has not paid the IPPs for years, and IPPs are at the brink of default being owed an amount of approximately Rs. 600 billion, they still continue to remain available to provide uninterrupted supply of electricity for the country, always keeping the greater national interest at the forefront.

    Previously, nine IPPs had already given a lot of relaxations to the Government in the form of a Settlement Agreement, keeping in mind the national interest. Yet it was the Government that has been unable to obtain formal approval(s) to implement the same; hence that opportunity has been lost.

    The settlement agreement was consented to by such IPPs that had won the Arbitral Award by the London Court of International Arbitration (LCIA) in 2017 for the recovery of unpaid capacity payments, which had been deducted in contravention of legally valid and binding Power Purchase Agreements.

    It is important to remember that similar witch-hunting exercises in the past have caused immense damage to the investment climate and economic prospects of the country, and if we do not learn from the past mistakes, it will again lead to the same negative results.

    The IPPs have always remained available to engage in a meaningful dialogue with the Government to discuss and find an amicable solution to the most pressing needs of the country.

    In the prevalent conditions, given the COVID-19 Pandemic, the IPPAC and IPPs stand ready to do their part to help the Pakistan economy and nation during this time of need, in addition to providing uninterrupted power supply.

  • Pakistan aviation issues procedures for international flights to minimize COVID-19 risks

    Pakistan aviation issues procedures for international flights to minimize COVID-19 risks

    KARACHI: The Pakistan Civil Aviation Authority (PCAA) has implemented new Standard Operating Procedures (SOPs) for international flights to minimize the risks associated with the COVID-19 pandemic. These measures, detailed in a recent directive, are designed to ensure the safety of passengers and crew members during air travel to and from Pakistan.

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  • Rules drafted for issuance of saving securities for NRI Pakistanis

    Rules drafted for issuance of saving securities for NRI Pakistanis

    ISLAMABAD: The Finance Division has drafted rules for issuance of scripless saving scheme for Non-Resident Individuals (NRIs) Pakistanis, which will be available in three different tenure securities.

    The rules shall be called the ‘Overseas Pakistani Saving Bills Rules, 2020.’ The non-resident Pakistanis having national identity cards for overseas Pakistanis, foreigners having Pakistan origin card, members of overseas Pakistanis foundation or an employee or official of the federal government or a provincial government posted abroad are eligible to open foreign currency account and NRAR as per existing regulations shall purchase the bill.

    The finance division said that the bill shall be issued in scripless form or any other form or format as approved by the finance division in consultation with the State Bank of Pakistan (SBP).

    It further said that the bill would be issued in conventional form and also in Shariah compliant form as per Shariah structure.

    The bill shall be issued for three, six or twelve months or any other tenor. Further, the bill shall be issued in both Pak Rupee and US Dollar or any other currency.

    The minimum denomination of the bill and maximum investment limit shall be as announced by the finance division.

    It said that the bill shall be issued through selected commercial banks that would be selected by the Central Directorate of National Savings (CDNS) in consultation with the SBP. CDNS shall issue or allocate inventory of scripless bill to agent bank for issuance to their foreign currency (FCY) or NRAR account holders.

    The agent bank shall keep the bill inventory so received by CDNS in the CDNS securities account to be opened with them and shall make arrangements to update CDNS about the usage of the inventory and its reconciliation with CDNS.

    The agent banks shall also open investment portfolio securities (IPS) accounts of the account holders purchasing the bill and credit the bill in the IPS accounts.

    The funds for investment in bills must be remitted from abroad as per prevailing regulations and processes. Provided that funds remitted in the non-resident foreign currency accounts and NRAR accounts of the investor after April 15, 2020 may be used for investment in the bills. Provided further that the residents’ foreign currency accounts shall not be used for investment in the bill.

    Explaining rate of return, the finance division said that it would notify the rate of return on the bill and frequency of payment from time to time. Undrawn profit shall not be eligible for compounding. Profit payment shall be made directly only to the account of the investor.

  • Tax incentives for all sectors demanded; letter sent to PM

    Tax incentives for all sectors demanded; letter sent to PM

    KARACHI: Business community has urged the government to grant tax relief package for all sectors of the economy in order to dilute the adverse effect of coronavirus.

    Agha Shahab Ahmed Khan, President, Karachi Chamber of Commerce & Industry (KCCI) while emphasizing the need to consider out of the box solutions, urged the government to formulate an across-the-board incentive package encompassing all the sectors of trade and industry in order to stimulate the economy so as to minimize the impact of global recession and prevent massive unemployment in Pakistan.

    In a letter sent to Prime Minister Imran Khan, Agha Shahab gave numerous recommendations for the proposed across-the-board incentive package in which General Sales Tax (GST) rates should be reduced from 17 percent to 9 percent while Withholding Tax (WHT) on all supplies by manufacturers and traders must also be brought down from the current 4.5 percent to 2 percent and the anomaly in WHT rates on import of raw materials by industry and commercial importers has to be removed and a uniform rate of withholding tax should be applicable on both to support the Small & Medium Enterprises (SMEs).

    He said that most importantly the discretionary powers under Section 140 of Income Tax Ordinance to access the bank accounts of registered persons be withdrawn, in order to restore confidence of investors and encourage transactions through banking system.

    He recommended that the policy rate has to be reduced to 7 percent in line with other countries to stimulate the economy whereas the deferred import bills which are due for payment through banks should be refinanced at 5 percent mark-up.

    President KCCI also recommended no questions should be asked for all investments in capital goods, raw materials, premises, acquisition of land and building for industry and trade up to June 30, 2022.

    He noted that many other countries have taken initiatives to support their economies and announced incentive packages worth trillions of dollars to bail out the businesses which are going to suffer due to o recession triggered by COVID-19 pandemic.

    “Even the Bangladeshi government has announced an across the board relief package of $8.6 billion which includes significant support to SMEs.”

    He pointed out that the black economy in Pakistan is twice the size of documented economy and due to the present coercive tax regime and laws, a very large amount of capital is blocked in idle investments.

    In view of the prevailing global economic crisis and its negative impact on Pakistan, it is essential to release the blocked capital and encourage investments into productive economic activities such as industry and trade.

    Appreciating the Special Incentive Package for Construction Industry, President KCCI, however, said that the benefits of concessions granted to one or two specific sectors will neither reach the majority of trade and industry nor provide relief to common man.

    In the present extra-ordinary circumstances, it is necessary to provide across the board incentive package for investment in all sectors of trade and industry, and the SMEs which have a major contribution to GDP and Tax revenues, he added.

    It is a critical and challenging time for the country and its economy, therefore the government has to remove the bureaucratic shackles and handicaps created by a very complex tax system, to unleash the entrepreneurial capacity of business community.

  • Weekly Review: positive sentiments to prevail on lockdown easing

    Weekly Review: positive sentiments to prevail on lockdown easing

    KARACHI: The stock market may be in positive zone during next week as the government prepares to ease off lockdown in the country, analysts at Arif Habib Limited said.

    Moreover, loan disbursement from IMF of $1.4 billion next week will also relieve fiscal pressures and set in motion aggressive measures to counter any economic fallout amidst corona.

    In addition, with the construction sector resuming operations from April 14, 2020, cement and steel are expected remain in limelight.

    Whereas with global demand curtailment owing to corona exceeding oil output cut by various countries, we believe oil prices may remain range-bound.

    The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) is currently trading at a PER of 5.8x (2020) compared to Asia Pac regional average of 10.2x and while offering DY of ~8.7 percent versus ~3.1 percent offered by the region.

    The KSE-100 index opened up on a positive note on Monday morning, given announcement of a construction package by PM Khan on the last day of the prior week. Albeit, momentum could not sustain and the sentiment quickly turned negative over expectations of economic slowdown by the Asian Development Bank and World Bank followed by increase in new COVID-19 cases (18 percent DoD on Monday).

    Bulls returned the following day after crude oil prices went up in anticipation of agreement over significant cut in oil production by OPEC+ followed by possibility of an energy sukuk issuance.

    Furthermore, FATF extended Pakistan’s deadline to meet targets till Sep’20, which kept the trajectory positive. The KSE-100 closed at 32,033 points, gaining 411 points (up by 1.3 percent) WoW.

    Sector-wise positive contributions came from i) Oil & Gas Exploration Companies (132 points), ii) Cement (78 points), iii) Fertilizer (71 points), iv) Insurance (70 points) and Power Generation & Distribution (37 points).

    Meanwhile, sector-wise negative contribution came from i) Automobile Parts & Accessories (20 points), Tobacco (13 points) and Textile Composite (13 points). Scrip-wise positive contributions were led by OGDC (127 points), BAFL (51 points), HUBC (49 points), FFC (42 points) and DGKC (40 points).

    Foreign selling continued this week clocking-in at USD 16.2 million compared to a net sell of USD 36.1 million last week. Selling was witnessed in Commercial Banks (USD 5.9 million) and Cement (USD 2.1 million).

    On the domestic front, major buying was reported by Individuals (USD 9.4 million) and Insurance Companies (USD 5.0 million). Average Volumes settled at 186 million shares (down by 18 percent WoW) while average value traded clocked-in at USD 42 million (down by 8 percent WoW).

  • Monetary penalty up to Rs25 million recommended for unlawful personal data processing

    Monetary penalty up to Rs25 million recommended for unlawful personal data processing

    ISLAMABAD: The Ministry of Information Technology and Telecommunication (MoITT) has proposed a monetary penalty of up to Rs25 million for unlawful processing of personal data under the Personal Data Protection Bill, 2020. This significant step aims to safeguard individuals’ privacy and ensure compliance with data protection standards.

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  • FBR grants tax exemption on donations to PM Corona Relief Fund

    FBR grants tax exemption on donations to PM Corona Relief Fund

    ISLAMABAD: Federal Board of Revenue (FBR) on Friday exempted income tax on donations made to Prime Minister’s Corona Relief Fund.

    The FBR issued SRO 300(I)/2020 to make amendment to Second Schedule of Income Tax Ordinance, 2001 to allow exemption from whole of income tax on donations made to PM Corona Fund.

    The FBR also granted exemption from minimum tax to the donations made towards the Prime Minister’s COVID-19 Pandemic Relief Fund – 2020.

    The FBR also exempted the withholding tax deduction on non-cash banking transactions made by taxpayers not on the Active Taxpayers List (ATL) under Section 236P of the Income Tax Ordinance, 2001.

    Further, Section 151, Section 231A and Section 231AA will also not apply to donations made to the Prime Minister Corona Relief Fund.

  • Workers remittances grow to $17 billion in nine months

    Workers remittances grow to $17 billion in nine months

    KARACHI: The inflows of remittances sent home by overseas Pakistanis increased by six percent during first nine months (July – March) 2019/2020, State Bank of Pakistan (SBP) said on Friday.

    The workers’ remittances received during July – March 2019/2020 amounted to round $17 billion recording an increase $960.7 million or 6.0 percent over $16.031 billion remittances received during July – March 2018/2020.

    Workers’ remittances during March 2020 amounted to $1,894.4 million recording an increase of $69.4 million or 3.8 percent over remittance received during previous month (February 2020 $1,825.0 million).

    The remittances during March 2020 ($1,894.4 million) increased by $160.9 million or 9.3 percent over remittance received during corresponding month of FY-19 (US $ 1,733.5 million).

    During March 2020, larger amounts of Workers’ Remittances are received from Saudi Arabia (US $ 452.3 million), UAE (US $ 420.4 million), USA (US $ 352.4 million) and UK (US $ 248.5 million) recording an increase of 7.2 percent, 8.6 percent, 5.5 percent for Saudi Arabia, UAE and USA respectively whereas a decrease of 2.0 from UK as compared to February 2020.

  • Car sales plunge by 70 percent on coronavirus lockdown

    Car sales plunge by 70 percent on coronavirus lockdown

    KARACHI: The sales of locally assembled cars have plunged by 70 percent year on year (YoY) in March 2020.

    According to analysts at Topline Securities, the car sales (as reported by Pakistan Automobile Manufacturers Association) have plunged by 70 percent YoY and 43 percent MoM in March 2020 amidst the lockdown in the country due to the outbreak of COVID-19.

    The lockdown in the country started on Mar 23, 2020.

    Pak Suzuki Motor Company (PSMC) recorded its lowest monthly sales since March 2009 with volumes declining by 81 percent YoY and 50 percent MoM.

    Indus Motor (INDU) and Honda Car (HCAR) did not fare any better with 50 percent YoY/43 percent MoM and 59 percent YoY/27 percent MoM decline in volumes, respectively.

    The abysmally low sales because of COVID-19 outbreak have added to the sector’s already weak sales, resulting in overall auto sales registering a decline of 47 percent YoY in 9MFY20.

    The sales by Atlas Honda (ATLH) of motorcycles decreased by 24 percent YoY and 24 percent MoM to 69k units, which is the lowest monthly sale for ATLH since Jul-2016.

    The tractor sales recorded a 49 percent YoY decline, however fell by only 7 percent MoM.

    Millat Tractors (MTL) reported an increase of 2 percent MoM in its sales, while Al Ghazi Tractors (AGTL) sales declined by 22 percent MoM.

    The analysts expect tractors sales to be relatively less affected because of COVID-19 outbreak, as the focus of the government has been to keep agriculture related activities up and running.