Pkrevenue.com

Month: April 2021

  • Nisab of Zakat fixed at Rs80,933

    Nisab of Zakat fixed at Rs80,933

    ISLAMABAD:  The administrator general Zakat on Saturday issued the ‘Nisab of Zakat’ for the Zakat Year 1441-42 A.H at Rs.80,933.00/- (Rupees: eighty thousand nine hundred thirty-three only).

    No deduction of Zakat at source shall be mentioned in column 2 of Serial No.1 of the first schedule of Zakat and Ushr Ordinance, 1980 is less than Rs. 80, 933.00/- (Rupees: eighty thousand nine hundred thirty-three only), on the first day: of Ramazan-ul -Mubarak, 1442 A.H as the “Deduction Date” likely to fall on 14th or 15th April 2021 (subject to appearance of moon) for deduction of Zakat from Saving Bank Accounts, Profit and Loss Sharing Accounts and other similar.

    Account having credit balance of Rs. 80,933.00/- (Rupees: eighty thousand nine hundred thirty-three only).

  • FBR urged to allow commercial import of used cars to end auto assemblers monopoly

    FBR urged to allow commercial import of used cars to end auto assemblers monopoly

    KARACHI: Federal Board of Revenue (FBR) has been urged to allow commercial import of used and reconditioned cars of models up to five years old to end monopoly of local car assemblers.

    Karachi Chamber of Commerce and Industry (KCCI) in its proposals for budget 2021/2022 recommended the commercial import of used and reconditioned motor cars up to five years old.

    The chamber said that during the past 40 years, assemblers of automobiles have enjoyed protective duties, exemptions and virtual monopoly in Pakistan’s automobile car market.

    Contrary to initial agreements, the assemblers failed to implement deletion program up to 90 percent. Instead, they are importing CKD while they have created vendors who mostly import auto parts and supply to these assemblers.

    Consequently, the so called vendor industry is only producing low quality and non-mechanical parts which is clearly visible in locally assembled cars.

    So far the assemblers have only drained Pakistan’s foreign exchange reserves to the tune of billions of dollars.

    Quality of automobiles produced by the assemblers is so poor that not a single unit of these cars has ever been exported to any country.

    Despite such poor quality, artificial shortage is created to fetch a premium on the early delivery and allow undocumented investors to exploit genuine buyers.

    The chamber said that import of reconditioned cars more than 3 years old model has been restricted to favor the assemblers and exploit the middle class people of Pakistan who can no more afford to buy even a small 660cc to 1000cc imported or local car.

    Ironically, import of brand new cars of high capacity and premium brands is allowed which only benefits the elite. Middle class consumers have been deprived of their right to purchase reasonably priced used/reconditioned cars which have a better quality and safety standard than the locally assembled new vehicles.

    Clearly there is an element of corruption, connivance and vested interest involved in formulating auto-policies. Unfortunately, the vested interests are also resisting to change the policy to allow import of reconditioned cars by reducing the Tariff rates and also permit import of cars of up to five year old models.

    The chamber further said that enough protection has been given for decades to assemblers.

    The chamber has given a comprehensive tariff plan for import of used and reconditioned cars.

  • Bank account holders should file tax returns, wealth statements

    Bank account holders should file tax returns, wealth statements

    KARACHI: Federal Board of Revenue (FBR) and State Bank of Pakistan (SBP) should devise a framework to ensure all customers of financial institutions whose account show turnover above Rs2 million have filed tax returns and wealth statement.

    “This could be done by the financial institutions simply notifying names/CNIC numbers of such customers to FBR without giving access to bank accounts,” this was recommended by Overseas Investors Chamber of Commerce and Industry (OICCI) in its proposals for budget 2021/2022.

    The chamber presented its proposals for broadening of tax base:

    FBR should simplify the tax structure of the country by implementing tax reforms recommendations already been submitted by various forums in the past, and also hold regular round table conferences with leading tax and legal experts to review existing laws for increasing the number of taxpayers and taxable entities.

    Tax authorities should use technology, data analytics including Artificial Intelligence tools and make better/effective utilization of NADRA database and other documented sources to ensure that all income earners are NTN holders and “Filers”, with submission of annual income tax/wealth returns and wealth reconciliation statements. FBR and SBP to devise a framework to ensure all customers of financial institutions whose account shows turnover in excess of PKR two million or more during the year, have filed a tax return and wealth statement. This could be done by the financial institutions simply notifying names/CNIC numbers of such customers to FBR without giving access to bank accounts.

    Art exhibition halls, hospitals where doctors practice, hotels and other public places holding large receptions for fashion houses & designers, sale of branded/designer dresses, airlines, travel agencies, etc should provide names and addresses of the respective persons involved in these business activities to the FBR on a quarterly basis. iv. Once the FBR receives the above information, it should be pro-active and pursue potential taxpayers by sending them income tax return forms requiring them to file tax returns – rather than waiting for the tax returns to be filed.

    Section 111(4) of ITO 2001, last amended in 2018, should be further reviewed to restrict tax free inward foreign remittances to immediate family members only.

    Eliminate culture of Amnesty Schemes as it discourages the honest taxpayers.

    Severe, and visible, penalties should be levied to punish tax evaders, starting with evasions of over PKR one million.

    As Pakistan is a signatory to the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes, which became operational from September 2018, regular coordination should be done with relevant authorities of countries, considered as tax heavens for stashing away illegal wealth, for information sharing, and cases of proven tax evasion publicly shared.

    Appropriate laws should be made to enable the government to seize local assets, in equivalent value, or levy appropriate taxes, if any person holds any kind of assets outside the country for which source of income could not be established.

  • Weekly Review: positive sentiment may prevail

    Weekly Review: positive sentiment may prevail

    KARACHI: Positive sentiments are likely to prevail in the stock market during the next week due to result season is commencing and investors hope healthy earnings.

    Analysts at Arif Habib Limited said that market to remain bullish in the coming week.

    With the result season commencing from next week, we believe cyclical sectors / scrips will be under the limelight on the back of healthy earnings expectations.

    Keeping in view the smart lockdowns in place in hotspot areas and aggressive vaccination drive by the Government, a complete lockdown is unlikely.

    With the Eurobonds proceeds helping SBP reserves cross USD 16 billion (highest level since July 2017), the analyst expect the PKR/USD parity to remain strong.

    The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) is currently trading at a PER of 6.8x (2021) compared to Asia Pac regional average of 16.4x and while offering DY of 7.1 percent versus 2.6 percent offered by the region.

    The market commenced on a negative note this week given 5,000+ cases being reported daily, due to which hotspot areas are again under smart lockdown and business timings have reduced.

    Moreover, IMF and World Bank forecasted GDP growth at 1.5 percent and 1.3 percent, respectively in FY21, which are lower than SBP’s projection of 3 percent.

    Moreover, news came in regarding extension of the Debt Servicing Suspension Initiative (DSSI) till December 2021 which was welcomed in the local bourse.

    Alongside this, expectation of robust quarterly results kept the index in the green. The market closed at 45,186 points, gaining 886 points (up by 2 percent) WoW.

    Sector-wise positive contributions came from i) Cement (280 points), ii) Technology & Communication (256 points), iii) Textile Composite (65 points), iv) Engineering (58 points) and v) Power Generation & Distribution (57 points).

    Sectors that contributed negatively include i) Commercial Banks (40 points), ii) Auto Assembler (22 points) and iii) Fertilizer (21p points). Scrip-wise positive contributors were TRG (251 points), LUCK (124 points), DGKC (45 points), HUBC (34 points) and NRL (33 points) while negative contributors included FFC (24 points), BAHL (20 points) and INDU (17 points).

    Foreign selling continued this week clocking-in at USD 9.5 million compared to a net sell of USD 4.9 million last week. Selling was witnessed in Commercial Banks (USD 4.2 million) and Fertilizer (USD 3.0 million). On the domestic front, major buying was reported by Banks / DFIs (USD 3.2 million and Companies (USD 2.5 million). Average volumes arrived at 410 million shares (up by 9 percent WoW) while average value traded settled at USD 122 million (down by 9 percent WoW).

  • Revamping withholding tax regime with maximum five rates recommended

    Revamping withholding tax regime with maximum five rates recommended

    KARACHI: Federal Board of Revenue (FBR) has been urged to revamp withholding tax regime and bring down the existing 50 different tax rates to maximum five rates.

    Overseas Investors Chamber of Commerce and Industry (OICCI), the representative body of foreign investors operating in Pakistan and multinational companies, in its proposals for budget 2021/2022 suggested the FBR to revamp the withholding tax regime, which is one of the key irritants for compliant taxpayers.

    It said that the fact that the ‘Collection and Deduction of Income Tax at Source (Withholding Agents Perspective) (Taxpayer’s Facilitation Guide)’ on the FBR website is of 48 pages highlights the complexity of the withholding tax regime which has more than 30 tax provisions that need to be followed and 50 different tax rates, applicable on nearly all heads of receipts/payments.

    The rate of withholding/advance tax also varies depending upon the nature of transaction, legal/tax status of the parties i.e., company or individual and active or in-active filer.

    Moreover, FBR system does not auto populate taxes withheld in the portal to the credit of the beneficiary.

    Furthermore, different categories of withholding tax (WHT) rates have been prescribed under the ITO 2001, for various types of payments and it has become extremely difficult for the person processing payments to be precise and accurate in applying WHT rates and ensure compliance:

    The complexity for the withholding agent has been further compounded after the introduction of active taxpayers list and different rates for an active and non-active filer.

    The OICCI recommended the following:

    i. Withholding tax regime should be revamped by reducing it to a maximum of five rates for all withholding taxes and the differentiation should be on the basis of active and inactive taxpayers only.

    ii. All taxes withheld should be auto populated in the portal to the credit of the beneficiary.

    iii. Final Taxation Regime should be eliminated, and all withholding taxes should be available for adjustment and the operations wing of FBR should ensure that all persons whose taxes have been deducted file their tax returns.

    iv. Withholding agents should be given incentive in the form of 2% tax credit of the amount collected for facilitating the Government.

    v. In addition to the above administrative/streamlining issues, withholding/ advance tax rates on below transactions should be reconsidered.

    a) Withholding tax rate be reduced to 0.25% for all distributors in line with the withholding taxes applicable on dealers and sub-dealers of fast-moving consumer goods.

    b) Withholding tax rates applicable on services is 8 percent minimum tax regardless of the actual taxable income of the service provider. The nature of this tax effectively becomes indirect tax and increases the cost of doing business for service providers, hence, tax on services should be made adjustable.

    vi. Withholding tax deduction u/s 153 (1)(a) which is currently considered as minimum tax for all the suppliers (except manufacturers and listed companies) should be made adjustable at least for corporates appearing in active taxpayers’ list.

  • Asim Ahmed assumes charge of FBR chairman

    Asim Ahmed assumes charge of FBR chairman

    ISLAMABAD: Asim Ahmed, a BS-21 officer of Inland Revenue Service (IRS), has assumed the charge of 30th Chairman, Federal Board of Revenue (FBR) on Friday.

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  • President signs Pakistan Single Window Act

    President signs Pakistan Single Window Act

    ISLAMABAD: President of Pakistan, Dr. Arif Alvi on Friday signed the Pakistan Single Window Act, 2021, a statement said.

    Under the Pakistan Single Window Act, an independent institution having a Governing Council and Secretariat, would be established for the facilitation of national and international trade.

    The new law will provide a coordinated one-window system to facilitate exports, imports and transit trade.

    Establishment of an independent institution besides reducing the cost of doing business will also help ease cross border trade and transportation of goods.

    The institution will also help in timely processing of data and bring about improvement in the provision of quality services.

    The President also signed Senate Secretariat Services (Amendment), Act 2021.

    Under the Senate Secretariat Services (Amendment) Act 2021, signed into law by the President under article 75 of the Constitution, the BS-17 appointments in Senate Secretariat will be made through the Federal Public Service Commission (FPSC).

    However, the Senate Secretariat would be authorized to make appointments in BS-1 to BS-16.

    Direct appointments in BS-18 in Senate Secretariat have been done away with. The absorption of officers, posted in Senate Secretariat on deputation, has also been prohibited under the new law.

  • Total registered companies increase to 139,620; 85pc filing annual return

    Total registered companies increase to 139,620; 85pc filing annual return

    ISLAMABAD: The total number of registered companies with Securities and Exchange Commission of Pakistan (SECP) has reached to 139,620, a press release said on Friday.

    Out of the total registered companies, 118,280 companies are active, which accounts for 85 percent of total companies which are filling their annual returns, it added.

    The SECP said that the reforms introduced by the commission for ease of doing business and digitalization are resulting in continued growth of entrepreneurship in the country.

    In the first three quarters of FY 2020-21, SECP has incorporated 19,251 companies, representing an annual growth of 39 percent, compared to the same period last year. The SECP registered 14,493 companies in FY 2018-2019 and 16,945 companies in FY 2019-2020.

    In March 2021, despite the challenges of Covid-19, the SECP has witnessed 72 percent growth in registration of new companies by registering 2,513 new companies, compared to same month last year. This is the highest number of companies ever registered in a single month. Around 99 percent companies were registered online and 25  percent of applicants completed the incorporated process the same day. This month, 260 foreign users were also registered from overseas.

    Around 65 percent companies were registered as private limited companies, while around 31  percent were registered as single member companies and the remaining 5 percent were public unlisted companies, not for profit associations, trade organizations, foreign companies and limited liability partnerships. The construction & real estate sector took the lead with the incorporation of 414, trading with 393, IT with 311, services with 247, and food and beverages with 110.

    Foreign investment has been reported in 43 new companies. These companies have foreign investors from Afghanistan, Australia, China, Germany, Hungary, Iran, Korea South, Mauritius, Norway, Philippines, South Africa, Spain, Sweden, Thailand, Turkey, the UAE, UK and the US.

    The highest numbers of companies, i.e. 850 were registered in Islamabad, followed by 751 and 385 companies registered in Lahore and Karachi respectively. The CROs in Peshawar, Multan, Faisalabad, Gilgit-Baltistan, Quetta and Sukkur registered 176, 170, 104, 43, 22 and 12 companies respectively.

  • Tax collection from salary income grows by 69pc in TY2020

    Tax collection from salary income grows by 69pc in TY2020

    ISLAMABAD: The Federal Board of Revenue (FBR) witnessed a substantial increase in tax collection from salary income during tax year 2020, marking a sharp growth of 69 percent compared to the previous year. This significant rise is largely attributed to revisions in the income tax slabs for salaried individuals introduced under fiscal reforms.

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  • Stock market increases by 445 points on improved sentiments

    Stock market increases by 445 points on improved sentiments

    KARACHI: The stock market increased by 445 points on Friday owing to improved investors’ sentiments during the day.

    The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 45,186 points as against previous day’s closing of 44,741 points, showing an increase of 445 points.

    Analysts at Arif Habib Limited said that the market inched up further from the recent run-up it has had in the past few sessions, adding round about 1500 points on the table.

    Tech, Refinery, Cement, Steel, E&P and O&GMCs contributed to the positivity. Result expectations are helping Cement and Steel sector stocks go up and improvement in investor sentiment triggered other sectors.

    Refinery sector stocks performed on the expectation of approval from the Petroleum Division. Among scrips, WTL topped the volumes with 124.3 million shares, followed by TELE (60.1 million) and BYCO (50.1 million).

    Sectors contributing to the performance include Technology (+139 points), E&P (+84 points), Cement (+51 points), Banks (+46 points) and Textile (+44 points).

    Volumes increased from 383.1 million shares to 688.0 million shares (+80 percent DoD). Average traded value also increased by 41 percent to reach US$ 165.7 million as against US$ 117.5 million.

    Stocks that contributed significantly to the volumes include WTL, TELE, BYCO, UNITY and PRL, which formed 44 percent of total volumes.

    Stocks that contributed positively to the index include TRG (+120 points), HBL (+29 points), POL (+28 points), NRL (+24 points) and PPL (+22 points). Stocks that contributed negatively include ENGRO (-69 points), DAWH (-28 points), BAHL (-7 points), INDU (-4 points) and NATF (-4 points).