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Month: April 2021

  • Foreign investors call for strong protection of intellectual property rights

    Foreign investors call for strong protection of intellectual property rights

    KARACHI: Foreign investors from the platform of Overseas Chamber of Commerce and Industry (OICCI) have demanded strong protection of intellectual property rights in Pakistan for encouraging innovation and creativity in people and society.

     ‘The Overseas Investors Chamber of Commerce and Industry (OICCI) has always championed the cause of protecting Intellectual Property Rights in Pakistan which is critical for attracting and retaining FDI in the country’, commented Irfan Siddiqui President of OICCI on “Intellectual Property Rights Day” celebrated worldwide on April 26th annually.

    Irfan Siddiqui  added that ‘close monitoring of IPR regime in Pakistan has always been a fundamental part of the OICCI agenda.  Laws which give a strong protection to Intellectual Property Rights (IPR) play a key role in encouraging innovation and creativity in people and society’.

    OICCI stated that this year’s World Intellectual Property Rights Day, theme “IP & SMEs: Taking your ideas to market”, will help to highlight the fact that a strong IPR is not only a requirement for multinationals, but a key point for all commercial entities and consumers. Pakistan’s recent accession to the Madrid Protocol has given local businesses, especially exporters, protection of  their Trade Marks in 196 different member countries. There are various indigenous Geographical Indication (GI) products in Pakistan (eg, Peshawari chappals, Ajrak print and Sindhri mangoes). The GI (Registration and Protection) Act 2020 is crucial to secure worldwide recognition of the Pakistani products and has helped establish a system for the registration and protection of GI rights in Pakistan.

    ‘IPR protection motivates innovators, promotes business growth, creating employment, and diversifying the choice of products available to consumers. Strong and effective enforcement of IPR legal framework benefits consumers as they get the feeling of purchasing safe and guaranteed products, especially healthcare products”, commented Erum Shakir, OICCI Managing Committee member and Chairperson of the OICCI IPR Subcommittee

    Sharing the experience and way forward for improving the IPR regime in Pakistan, OICCI members representing the collective voice of top 200 foreign investors in Pakistan, have observed that while the IPR laws in Pakistan are, by and large, world class, its implementation is far from being effective. While appreciating various initiative of the IPR regulator in Pakistan, Intellectual Property Organization of Pakistan (IPO-P) towards facilitating IP protection and rationalizing the associated costs, the registration process for IPR ( copyrights, patents and Trade Marks) needs to be fully digitalized and fast turnaround timing to facilitate all IPR owners, spread all over the country.  This is needed to encourage, new innovators and SMEs to opt for IP Registration. Moreover, a fast track resolution of IP disputes, with enhanced capacity and knowledge sharing on IPR in special courts / tribunals is expected to accelerate new  registration of IPR and build positive image for the country.

    In conclusion, Irfan Siddiqui, OICCI President, observed, “we are proud of OICCI members contribution over the years in raising the awareness about the importance of Intellectual Property Rights in Pakistan for  attracting new FDI, and in promoting innovation and creativity and jobs in the country .  Working in partnership with IPOP and all relevant stakeholders, OICCI is promoting knowledge sharing for a more effective and business friendly IPR regime , so as to encourage innovators in Pakistan and worldwide to share their invention , including latest patents in medicine, in the country.  Without adequate IP protection, local innovators are unable to attract investments, business creation is slow, and jobs lost. Economic prosperity relies on job growth, and strong, effective IP rights have a role to play in creating both”.

  • Rupee weakens by 26 paisas against dollar

    Rupee weakens by 26 paisas against dollar

    The Pakistani rupee weakened by another 26 paisas against the US dollar on Monday, closing at Rs154.13 in the interbank foreign exchange market. This depreciation comes as demand for the greenback continues to rise due to import and corporate payment requirements.

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  • FBR authorizes IR Intelligence to access business premises

    FBR authorizes IR Intelligence to access business premises

    ISLAMABAD: Federal Board of Revenue (FBR) has authorized Directorate General of Intelligence and Investigation (I&I) to access business premises for detecting tax evasion and revenue leakages.

    The FBR through a notification authorized the DG I&I IR to carry out intelligence activities, access and verification of business premises, access to record/documents or system maintained therein, intelligence gathering on all tax related issues including under-reporting, tax evasion and revenue leakages.

    The directorate is authorized to collect information/record/documents from any person including taxpayer and third party-relating to financial transactions like investment and expenses etc. and details of persons who are involved in such activities.

    The FBR directed the directorate to process information and take necessary action on the basis of information provided by any other organization, agency or department under the relevant provisions of Income Tax Ordinance, 2001.

    Further, the directorate has been asked to utilize the information obtained through establishment of linkages by the Federal Board of Revenue with all major national, provincial other data bases to collect relevant information.

    The FBR asked the DG I&I to identify cases of income tax evasion and carry out inquiry, investigation, whichever is deemed fit, to retrieve the loss of revenue; to identify, investigate and prosecute cases of tax evasion and/or offences punishable under the Income Tax Ordinance, 2001 and the rules made thereunder.

    Further, the directorate is required to share and disseminate actionable information and corroborating evidence, where required, through written reports or information reports or otherwise to authorities or officers in the headquarters and field formations of the Federal Board of Revenue for further proceedings.

    The FBR also authorized the DG I&I to process, investigate and prosecute complaints of tax evasion; to process, investigate and prosecute information shared by other agencies and to carry out any other work or function that may be assigned to it by the FBR.

  • Tax offices highlight anomaly in granting concession, exemption on imported goods

    Tax offices highlight anomaly in granting concession, exemption on imported goods

    ISLAMABAD: Tax offices have highlighted anomaly in extending concessionary rate of tax or exemption under Section 148 of the Income Tax Ordinance, 2001 to imported goods at customs stage.

    Large Tax Offices (LTOs) Islamabad and Karachi pointed out the anomaly and advised the Federal Board of Revenue (FBR) to rectify as taxpayers were suffering.

    Large Taxpayers Office (LTO) Karachi in a communication sent to FBR HQ stated that only FBR had powers under Section 148 of the Income Tax Ordinance, 2001 to reclassify goods under Part III of Twelfth Schedule. “In this condition the power of commissioner Inland Revenue to issue reduced rate certificate under SRO 715(I)/2020 dated August 12, 2020 is legally valid?”

    The LTO Karachi said that the FBR issued SRO 715(I)/2020 through which Rule 40E was inserted to Income Tax Rules, 2002 and the requirement had been set for the taxpayer desirous of seeking reduced rate certificate on goods classified in Part III of the Twelfth Schedule to the Ordinance.

    The LTO Karachi said that even issuance of the rule the commissioner cannot issue reduced rate certificate because there is no statutory or enabling provision in the statute itself (substantive law) for issuance of reduced rate certificate to the goods classified in Part III of the Twelfth Schedule, even if import is being made by the industrial undertaking.

    Explaining the background, the LTO Karachi said that before amendment brought in by the Finance Act, 2020, Section 148(7) of Income Tax Ordinance, 2001 provided the tax to be collected on import of raw material or plant and machinery for own manufacturing use by Industrial Undertaking shall not be Minimum Tax or Final Tax as the case may be.

    To this effect, earlier reduced rate certificate on import of Plant and Machinery for Industrial Undertaking was governed under the SRO 947(1)/2008 which now stands rescinded and the facility of exemption on plant and Machinery vide SRO 1020(1)/2020 dated 8th October stands withdrawn. Similarly, exemption under section 148 on import of in-house use by industrial undertaking was governed by Clause 72B of Part-IV of the Second Schedule to the Income Tax Ordinance, 2001 which has been omitted by Finance Act, 2020.

    The LTO Karachi said that section 148 has been amended by Finance Act, 2020, whereby tax to be collected u/s 148(1) on imports has been made Minimum Tax by amending Section 148(7) of the Ordinance except in the case of “Industrial Undertaking” importing goods subject to collection of Import Tax at 1 percent or 2 percent with respect to goods specified in Part-I or Part-II of the Twelfth Schedule to the Ordinance.

    “ The Plant and Machinery being capital goods have already been classified and mentioned in Part-I of the Twelfth Schedule to the Ordinance which is subject to reduce rate of withholding. Similarly, Raw Materials specified in Part-II of the Twelfth Schedule are subject to 2 percent of advance tax collection at import stage under section 148. However, goods specified in Part-III of the Twelfth Schedule to the Ordinance are subject to advance tax collection on import at 5.5 percent.

    “This tax to be collected under Part-III of the Twelfth Schedule at 5.5 percent is minimum tax even if import is made by Industrial Undertaking for its own use. As sub-section 7 of section 148 states that tax required to be collected under section 148 is to be minimum tax except in case of import of goods by Industrial Undertaking for its own use on which tax to be collected is at the rate if 1 percent or 2 percent as the case may be.”

    The tax office further informed that Section 159 of the Ordinance only grants exemption in three conditions: (i) where amount subject to withholding is exempt from tax; (ii) where amount subject to withholding tax is reduced rate; (iii) or where taxpayer is entitled for 100 percent tax credit under section 100C of the Ordinance.

    The LTO Karachi presented its view that commissioner is not competent or authorized under Section 148 to issue any reduced rate certificate with respect to goods specified in Part III of the 12th Schedule to the Ordinance unless the import is made by taxpayer whose income is exempt.

  • Pakistan offers COVID relief support to India

    Pakistan offers COVID relief support to India

    KARACHI: Pakistan on Saturday offered relief support India to provide medical equipment for prevention of coronavirus.

    Foreign Minister Shah Mahmood Quershi in a tweet said that as a gesture of solidarity with people of India in the wake of the current wave of COVID-19, “Pakistan has officially offered relief and support to Indian including ventilators, Bi PAP, digital X ray machines, PPEs & other related items.”

    “We believe in a policy of humanity first,” he added.

    In addition to this the ministry of foreign affairs Pakistan also stated in a tweet that the concerned authorities of Pakistan and India can work out modalities for quick delivery of the relief items. “They can also explore possible ways of further cooperation to mitigate the challenges posed by the pandemic,” it added.

  • PIA escapes financial losses in Airbus A320 crash

    PIA escapes financial losses in Airbus A320 crash

    KARACHI: Pakistan International Airlines (PIA) has escaped from any financial loss as a result of Airbus A-320 that was crashed on May 22, 2020 a claimed 97 lives, according to annual result for the period ended December 31, 2020.

    According to the report, the Airbus A-320 was crashed in an accident on May 22, 2020. The said aircraft was included in the fixed assets of the company as right of use asset (RoUA) in accordance with IFRS 16 ‘Leases’.

    “The management determined that there is no significant financial exposure to the company as a result of the above incident as the above aircraft was on dry lease from GE Capital Aviation Services (GECAS),” according to the report.

    “As per the agreement, insurance for the aircraft was claimed out by the company, however, the settlement of the insurance amount will be directly between the insurance company and GECAS with no significant financial exposure to the company,” it added.

    Accordingly, the company has derecognized the RoUA and its corresponding lease liability amounting to Rs155.77 million and Rs329.62 million respectively and the remaining balance (a gain of Rs173.85 million) is credited to statement of profit or loss on termination of lease, the report said.

    “Furthermore, the company [PIA] has obtained passenger and third party liability insurance under which all the affected families and third parties on ground were eligible a compensation from the insurance company and the company is not liable for an further claims,” it added.

    The background of the unfortunate accident revealed that Pakistan International Airlines (PIA) flight PK 8303 was a scheduled domestic flight from Alama Iqbal International Airport Lahore to Jinnah International Airport Karachi.

    On May 22, 2020, the Airbus A320 in use crashed in Model Colony, a densely populated residential area of Karachi a few kilometers from the runway, while on a second approach after a failed landing.

    Of the 91 passengers and eight crew on board the aircraft (99 total on board, 91 lost their lives and two passengers survived with injuries.

    Eight people on the ground were also injured in the accident, one of them later succumb to her injuries. The PIA management expressed deep sorrow and grief over tragic incident and stand firmly with the families of the deceased passengers.

    Immediately, Emergency Response Center (ERC) and Station Emergency Coordination Room (SECR) were activated and Emergency Response Planning (ERP) Volunteer as well as PIA scouts were deployed to provide all possible assistance to the grieving families.

  • FBR advised to simplify withholding tax regime on imports

    FBR advised to simplify withholding tax regime on imports

    KARACHI: Federal Board of Revenue (FBR) has been urged to simplify the withholding tax regime on imported goods under Section 148 of the Income Tax Ordinance, 2001.

    Overseas Investors Chamber of Commerce and Industry (OICCI) in its proposals for budget 2021/2022 urged to FBR to simplify the withholding taxes on goods at the import stage.

    It suggested that the criteria for obtaining exemption under Section 148 of the Income Tax Ordinance, 2001 should be based on discharge of advance tax liability as per section 147 of the Income Tax Ordinance, 2001 and clause 72B of the part 1 of the second schedule should be restored.

    Raw materials imported at the rate of 5.5 percent withholding tax should not be subject to minimum taxation. This anomaly should be clarified by FBR at the earliest.

    Procedure for application of reduced rate of 2 percent on import of raw material for own use which are not covered under Part II of Twelfth Schedule is highly cumbersome and should be simplified.

    Section 148 (1) of the Ordinance to amended via the following insertion:

    “Provided that the Commissioner shall issue exemption certificate/ certificate of non-deduction / collection of advance tax at source at import stage within fifteen days of filing of application to exempt entities upon verification:

    Provided further that the Commissioner shall be deemed to have issued the exemption certificate upon the expiry of fifteen days to the aforesaid company and the certificate shall be automatically processed and issued by Iris”.

  • Weekly Review: third wave of coronavirus remains threat for stock market

    Weekly Review: third wave of coronavirus remains threat for stock market

    KARACHI: The third wave of coronavirus with high number of cases is remained a key risk for the stock market during next week, analysts said.

    Analysts at Arif Habib Limited said that while the NCOC has advised stricter restrictions and shorter work hours, a complete lockdown on a national level has been ruled out.

    This will be a sigh of relief for the business community. Albeit the third wave of the novel coronavirus (more lethal than the last two) remained a key risk for the market.

    The analysts said that the strong result season appears to be a solid indicator of the economic and corporate recovery.

    The benchmark KSE-100 of Pakistan Stock Exchange is currently trading at a PER of 6.7x (2021) compared to Asia Pac regional average of 16.1x while offering a dividend yield of ~7.2 percent versus ~2.6 percent offered by the region.

    With a perturbing political situation building up from last weekend (protests and sit-ins by TLP across the country and a series of failed negotiations with the government), the domestic equity bourse displayed adverse momentum at the beginning of the week.

    Although slight relief appeared in the form of robust result announcements, it remained short-lived as growing prevalence of COVID-19 infection globally (India made a new high in reported cases; over 332,000 in a single day) and rising local cases, squashed any signs of recovery at the market. While expectations of a wider lockdown to be implemented by the NCOC, also kept investors wary. The KSE-100 index closed at 44,707 points, down by 1.3 percent / 599 points WoW.

    Contribution to the downside was led by i) Oil and Gas Exploration Companies (210 points), ii) Cement (78 points), iii) Power generation (93 points), iv) Chemical (79 points), and v) Oil and Gas Marketing Companies (77 points). Whereas sectors that contributed positively include i) Commercial Banks (160 points) amid strong result outcomes, ii) Technology (58 points), and iii) Fertilizer (28 points). Scrip-wise major losers were OGDC (96 points), HUBC (76 points), and PPL (56 points). While top positive contributors were TRG (118 points), ENGRO (77 points), and HBL (60 points).

    Foreigners accumulated stocks worth of USD 7.3 million compared to a net sell of USD 0.9 million last week. Major buying was witnessed in Technology and Communication (USD 4.80 million) and Commercial Banks (USD 2.42 million). On the local front, selling was reported by Mutual Fund (USD 7.73 million) followed by Companies (USD 5.35 million). That said, average daily volumes and traded value for the outgoing week were down by 10 percent and 3 percent to 333 million shares and USD 97 million, respectively. 

  • DG Customs Valuation assigned task to stop trade based money laundering

    DG Customs Valuation assigned task to stop trade based money laundering

    ISLAMABAD:  Directorate General of Customs Valuation has been assigned to stop trade based money laundering through effective monitoring of goods clearance specially those goods having lower duty rates or exempt from duty and taxes.

    The Federal Board of Revenue (FBR) on Friday issued SRO 503(I)/2021 to redefine functions of the Directorate General of Customs Valuation.

    Through the SRO it is instructed the directorate that besides focusing on under invoicing of imports, also identify cases of over-invoicing of imports of low-duty or exempt items, and mis-invoicing of exports (to prevent flight of capital or trade-based money laundering) and to convey such information to concerned formations.

     The FBR also instructed the valuation department to make special arrangements to aware trade and industry about the latest customs valuation of import and export of goods.

    The directorate has been advised to develop and maintain a center for issuing advance rulings on valuation in accordance with international best practices.

    The FBR asked the directorate to regularly obtain reference price data from accredited publications, official price list, websites, through market enquiries as well as findings of Post Clearance Audit and other authentic sources and to make such data available to all customs stations for smooth clearance of goods.

    Further, the directorate has been advised to carry out proactive monitoring of valuation of goods imported into and exported from the country vis a vis international price trends, conduct and undertake sector wise studies of items prone to mis-invoicing and to advise the field formations regarding any abnormalities in valuation during clearance.

    To maintain effective liaison with Pakistan Mission abroad for the purpose of valuation enquiries, with relevant valuation committees of World Trade Organization and World Customs Organization, and with foreign customs administration.

    The FBR further advised the directorate to develop suitable training modules, in consultation with Directorate General of Training and Research, focused and providing necessary skills from basic level to advanced level to officers and officials working in all relevant functions including Model Customs Collectorates, Post Clearance Audit and Valuation Directorates.