Day: June 6, 2020

COVID levy on wealth of individuals, AOPs under consideration

ISLAMABAD: In order to generate revenue in the wake of coronavirus pandemic the government is considering to impose COVID levy, which may be on the wealth of individuals and Association of Persons (AOPs), sources said.

The sources said that the levy may be collected up to one percent of Rs100 million wealth declared by individuals / AOPs.

The government may introduce this levy through Finance Bill, 2020.

However, in case the income tax liability is more than the proposed levy then the chargeability of tax may under normal tax regime.

Further, this levy may not be imposed on corporate entities.

The COVID tax may be imposed as was introduced through Income Support Levy in 2013.

The sources said that the revenue collection of the Federal Board of Revenue (FBR) was adversely affected due to coronaviurs. They said that in the present scenario the government was not intending to burden the taxpayers, especially business concerns, through introduction of new taxes.

However, through this levy may be utilities for the support the efforts to combat against the pandemic.

The sources said that the estimated amount to be generated through this levy was may be around Rs30 billion.

June 6, 2020
Weekly Review: stock market to move with budget expectations

KARACHI: The stock market likely to move with the news flows related to budget 2020/2021 which is scheduled to announce on June 12, 2020.

Analysts at Arif Habib Limited said that with Federal Budget announcement scheduled for June 12, 2020, the market is expected to track budget related news flow.

Whereas market performance for June 2020 remains critical as during first eleven months of current fiscal year, the index has delivered a return of +0.09 percent in Pak Rupee terms.

The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) is currently trading at a PER of 7.2x (2020) compared to Asia Pac regional average of 12.6x and while offering DY of ~8.2 percent versus ~2.8 percent offered by the region.

The market opened on a positive note this week, welcoming further ease in lockdown and opening up of several businesses with Standard Operating Procedures (SOPs) in place.

Moreover, rising oil prices, with revival of economic activity internationally, kept the E&P scrips under limelight. Besides this, inflation for the month of May 2020 also declined to 8.2 percent, in line with expectations while improvement in exports on a MoM basis also relieved investors.

While anticipation of relief reforms in Budget 2020-21 also kept the sentiment alive.

However, rapid spread of COVID-19 cases and decline in foreign reserves by USD 1.67 billion being reflected in the Pak Rupee-USD parity (depreciation to 163/USD this past week) prevented the market from outperforming.

The market settled at 34,350 points, gaining 419 points (up by 1.2 percent) WoW.

Sector-wise positive contributions came from i) Commercial Banks (401 points), ii) Oil & Gas Exploration Companies (78 points), iii) Automobile Parts & Accessories (32 points), iv) Textile Composite (25 points) and Pharmaceuticals (19 points).

However, sector-wise negative contribution came from i) Fertilizer (53 points), ii) Power Generation & Distribution (30 points) and Insurance (25 points). Scrip-wise positive contributions were led by MCB (110 points), UBL (100 points), POL (66 points), HBL (66 points) and BAHL (54 points).

Foreign selling continued this week clocking-in at USD 15.3 million compared to a net sell of USD 2.4 million last week. Selling was witnessed in Commercial Banks (USD 5.0mn) and Textile Composite (USD 4.4 million). On the domestic front, major buying was reported by Companies (USD 7.4 million) and Mutual Funds (USD 6.6 million).

Average Volumes settled at 157 million shares (down by 27 percent WoW) while average value traded clocked-in at USD 39 million (down by 27 percent WoW).

June 6, 2020
FBR starts payment of income tax refunds

ISLAMABAD: Federal Board of Revenue (FBR) on Friday started payment of income tax refunds directly to the bank accounts of those taxpayers who have provided their IBAN.

FBR sources said that the FBR had received Rs10 billion from the finance division for the payment of income tax refunds. The FBR issued cumulative up to Rs5 million to a taxpayer.

The FBR explained term cumulative as the total amount of refund in respect of a taxpayer (for the tax year 2014 to 2019) duly processed and sanctioned under the law.

The release of income tax refunds is under Prime Minister’s relief package in order to reduce impact of the coronavirus on businesses.

Under the prime minister package an amount of Rs100 billion has been allocated for the payment of claims under sales tax, income tax and duty drawback.

FBR sources said that so far around Rs58 billion, including income tax refunds, had been disbursed to the claimants.

The business community was not happy with the decision to put restriction on disbursement of income tax refunds.

It is most unfortunate and disappointing to know that FBR has put ceiling of Rs. 5 million (cumulative of 5 years).

This has closed the access to even those business entities which have cumulated tax refunds of even one rupee more than Rs. 5 million in 5 years from 2014-15 to 2018-19income tax refunds.

Nisar said that the said ceiling instructions issued by FBR is discriminatory and strongly asked Finance Ministry to instruct for releasing of at least Rs. 5 million income tax refunds to all businessmen regardless of level of their income tax refunds accumulation in the last 5 years.

He said that the apex body is of the view that Ministry of Finance should also consider to release half of the accumulated income tax refunds to help in economic revival exercise under taken by the government.

June 6, 2020
FBR urged to allow tax holiday on import of industrial raw material

KARACHI: Federal Board of Revenue (FBR) has been urged to allow tax holiday to import of industrial raw material in order to help the country to fetch much needed foreign exchange through enhanced exports.

Karachi Chamber of Commerce and Industry (KCCI) in its proposals for budget 2020/2021 submitted to the FBR, said that Pakistan’s exports are limited to very few sectors.

Payment of cash subsidies and multiple currency depreciation failed to improve exports. As per Fifth Schedule to the Customs Act, 1969 Imports of Textile Machinery and equipment for textile sector is exempted from custom duty and rate of withholding tax is one percent by the textile manufacturing units registered with Ministry of Textiles whereas for other industries Customs Duty is levied at 5.5 percent which is discriminatory and an anomaly.

The exports of non-traditional items have not been promoted due to such discriminatory treatment.

Pakistan could not achieve true export potential which exists in many sectors.

The KCCI proposed that there is a need to go beyond textile and agriculture products.

Export diversification is important. For this all industrial machineries and equipment not locally manufactured may be exempted from Customs Duty, Additional Customs Duty/Sales Taxand Additional Sales Tax.

Withholding Income Tax may be charged at 1 percent, which may be Adjustable/Refundable.

Machineries with latest technology will be imported production will increase for local consumption and for global exports.

Employment and government revenue will increase.

June 6, 2020