KARACHI: The Pakistani Rupee experienced a decline of 34 paisas against the US Dollar on Wednesday, closing at Rs158.53 in the interbank foreign exchange market.
(more…)Author: Mrs. Anjum Shahnawaz
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Bitcoin plunges below $30,000; other cryptocurrencies mirror crash
LONDON: Bitcoin on Tuesday plunged below $30,000 after a crackdown launched by Chinese central bank.
Bitcoin made around 50 per cent losses since it hit an all time high in April this year.
The cryptocurrency has suffered several price falls in recent days, having traded above $40,000 just one week ago.
The world’s largest cryptocurrency dropped to $28,600, its lowest since early January, after giving up gains made during Asian hours. Its fall also pressured smaller coins such as ether.
Bitcoin tumbled 11 per cent on Monday, its largest one-day drop in over a month, with losses of nearly 30 per cent in the last week alone almost wiping out gains for the year-to-date. It was last down 2.3 per cent at $30,896.
The sell-off was sparked by the People’s Bank of China urging China’s largest banks and payment firms to crack down harder on cryptocurrency trading, the latest tightening of restrictions on the sector by Beijing.
Crypto exchanges were effectively pushed out of China by a 2017 rule change, but over-the-counter platforms based overseas have sprung up to receive payment from people based in China and buying cryptocurrencies on their behalf.
Independent.co.uk reported that several other leading cryptocurrencies have mirrored bitcoin’s latest crash, including Ethereum (ether), Cardano (ada) and dogecoin.
The market-wide crash took the overall market cap of all cryptocurrencies combined below $1.2 trillion for the first time since February. Half a trillion dollars has been wiped from the market in the last seven days alone.
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Tax Maloomat captures assets, bank account details of 53 million citizens
ISLAMABAD: The Tax Maloomat (information) – a program launched by the Federal Board of Revenue (FBR) has captured details of 53 million citizens who have made transactions and withholding tax was deducted.
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SBP’s adoption of market-based exchange rate and its impact on current account balance: analysis
KARACHI: The current account balance of the country turned in to surplus following the State Bank of Pakistan (SBP) adopted market-based exchange rate regime.
The State Bank of Pakistan (SBP) adopted market-based exchange rate regime in May 2019. Resultantly, the current account deficit (CAD) of US$ 19.2 billion in FY2018 gradually came down to US$ 13.4 billion in FY2019 and improved further to US$ 4.4 billion in FY2020.
Subsequently, the CAD during July-March FY2021 turned into surplus of US$ 959 million on cumulative basis as compared to a deficit of US$ 4.1 billion in the same period of FY2020. Much of the improvement came from robust growth in the workers’ remittances since FY2020.
Following are some developments that have led to the sustained Current Account improvement so far in the current year:
Market based exchange rate led to a sharp reduction in kerb premium; supporting growth in workers remittances: Workers’ remittances continued to extend their unprecedented streak of above US$ 2.0 billion for the tenth consecutive month in March-2021. Notably, the monthly inflow subsequent to introduction of market-based exchange regime remains higher as compared to the average monthly inflow before the regime was put in place
This is well complemented by the entrenchment of drastic reduction in the kerb premium after introduction of the market-based exchange rate regime, which will be instrumental in encouraging any growth of remittances to flow through formal channels.
The existence of orderly foreign exchange market conditions, along with the emerging evidence that investment opportunities provided through Roshan Digital Accounts are gaining momentum, are going to support the Current Account in the coming months.
The transition towards the market based flexible exchange rate regime helped retain competitiveness in external trade. While nominal exchange rate is important, to retain external competitiveness, the inflation differential with trading partners and share of trade weight also matter. Accordingly, it is also important to note that the Real Effective Exchange Rate (REER), that accounts for these aspects, fared well after the adoption of the market-based regime in May 2019. As figure shows that REER index, relative to its level in May 2019 when the extent of overvaluation was deemed corrected, has remained relatively stable around the same level indicating that underlying competitiveness of the economy has been preserved.
Following adoption of market-based exchange rate, non-essential imports remained in check. Despite general appreciation of the Pak rupee during FY2021 so far, imports during July-February FY2021 increased by 7.8 percent (y/y). However, if adjusted for import of one-off items, which include wheat (US$ 916 million), sugar (US$ 127 million) and raw cotton in excess from same period during FY2020 due to domestic shortfall (US$ 480 million), import growth during July-February FY2021 amounts to a much lower level of 2.9 percent.
Export growth after adoption of the market-based exchange rate regime has been encouraging. After a decline in FY2020, led by the COVID-19 related disruptions during Q4 FY2020, exports during July-February FY2021 increased by 4.4 percent (y/y). The two-way movement of the Pak rupee against the US$ played a key role in stabilizing REER and maintaining export competitiveness during heightened global uncertainty. This is evident from the recovery in volumes of major exports after extreme pandemic period between April-July 2020 (Figure 3).
So far, this new mechanism has served well for rebuilding Pakistan’s FX reserve. As compared to FY2019 (US$ 7.3 billion) and FY2020 (US$ 12.1 billion), SBP official FX reserves stood at US$ 16.1 billion on 9th April 2021. Along with this, SBP’s forward swap liabilities have been curtailed to US$ 4.5 billion at present from US$ 8.0 billion during FY2019. In aggregate, country’s foreign exchange buffers increased by US$ 12.3 billion.
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Advance tax on stock exchange transactions abolished
KARACHI: The government through budget 2021/2022 has abolished advance tax on stock exchange transactions and in this regard required amendment has been proposed through Finance Bill, 2021.
Tax experts at KPMG Taseer Hadi & Co. in its commentary on budget 2021/2022 said that the stock exchanges registered in Pakistan were required to collect advance tax from their members on purchases and sales of shares in lieu of tax on commission earned by them.
The Finance Supplementary (Second Amendment) Act, 2019 abolished the collection of this advance tax effective 01 March 2019.
Resultantly, applicability of section 233 of the Income Tax Ordinance, 2001 i.e. withholding of tax on commission income was triggered.
However, there is a point of view that taxation of income earned by members of stock exchange registered in Pakistan still covered under this section.
In view of above, the Bill proposes to withdraw section 233A of the Income Tax Ordinance, 2001, hence, after such amendment, the taxability of income earned by members of stock exchanges now compulsorily fall under section 233 of the Ordinance.
The bill also proposed to abolish collection of tax by National Clearing Company of Pakistan Limited (NCCPL).
NCCPL collects advance tax from the members of Stock Exchanges registered in Pakistan on margin financiers, trading financiers and lenders in respect of margin financing in share business. The Bill proposes to withdraw such collection of tax.
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Retailers accepting debit, credit cards payment to be treated as Tier-I
ISLAMABAD: The Federal Board of Revenue (FBR) will bring more retailers into sales tax ambit after the proposal made through Finance Bill, 2021 related to Tier-I retailers.
Tier-I retailers are commonly known for having huge volume sales and operating in a mall, air conditioned environment etc.
Sources in the FBR said that retailer receiving payment through debit card and debit card would also qualify for Tier-I retailers.
KPMG Taseer Hadi & Co. Chartered Accountants in its commentary on Budget 2021/2022 stated that the Section 2(43A) of Sales Tax Act, 1990 provides threshold limit and qualification criteria for tier-1 retailers.
The Finance Bill now proposes to enhance the qualification criteria of tier-1 retailers by following additions
– Retailers of furniture whose shop measures two (2) thousand square feet or more.
– Retailer operating an online market place supplying goods through e-commerce platform, whether the goods are owned by him or not.
– A retailer who has acquired point of sale for accepting payment through debit or credit cards from banking companies or any other digital payment service provider authorized by State Bank of Pakistan.
The Bill further proposes to do away with on incentive of the cash back, up to five percent of the tax involved, to customers of Tier-1 retailer who have integrated their retail outlets with the Board’s computerized system for real-time reporting of sales.
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Stocks end flat in range bound trading
KARACHI: The stock market ended flat on Tuesday in a range bound trading activity. The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 47,987 points as against previous day’s closing of 48,013 points, showing a decline of 25 points.
Analysts at Arif Habib Limited said that the market remained depressed trading in a narrow range between -81 points and +142 points, closing the session -25 points.
Lack of direction in the market and docile reaction to price triggers (particularly Crude Oil) has led the market into obscurity. Selling pressure remained evident in Cement, E&P, O&GMCs, Steel, Technology and Power sectors.
Textile sector did see some positive activity with NCL, NML, GATM and ILP showing better price performance. Among scrips, SILK realized trading volume of 75.1 million shares, followed by WTL (48.2 million) and KEL (37.4 million).
Sectors contributing to the performance include Textile (+68 points), Technology (+18 points), E&P (+16 points), Food (+12 points) and Miscellaneous (-32 points).
Volumes declined from 839.2 million shares to 610.7 million shares (-27 percent DoD). Average traded value also declined by 2 percent to reach US$ 98.1 million as against US$ 100.5 million.
Stocks that contributed significantly to the volumes include SILK, WTL, KEL, ANL and TPL, which formed 37 percent of total volumes.
Stocks that contributed positively to the index include SYS (+30 points), KTML (+21 points), MARI (+21 points), ANL (+20 points) and GATM (+13 points). Stocks that contributed negatively include PSEL (-34 points), UNITY (-12 points), DAWH (-10 points), NBP (-10 points) and OGDC (-9 points).
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Karachi Interbank Offered Rates on June 22
KARACHI: State Bank of Pakistan (SBP) issued following Karachi Interbank Offered Rates (KIBOR) for June 22, 2021.
Tenor BID OFFER 1 – Week 6.92 7.42 2 – Week 6.96 7.46 1 – Month 7.01 7.51 3 – Month 7.20 7.45 6 – Month 7.44 7.69 9 – Month 7.51 8.01 1 – Year 7.56 8.06 -
Rupee weakens by 68 paisas against dollar
KARACHI: The Pak Rupee ended down by 68 paisas against the dollar on Tuesday owing to demand for import and corporate payments.
The rupee ended Rs158.19 to the dollar from the previous day’s close of Rs157.51 in the interbank foreign exchange market.
Currency experts said that due to year-end demand for dollars remained high. They said that corporate buyers were seen busy buying dollars for sending profit and dividends to their parent companies in various destinations of the world.
They said that due to ease in corona restrictions the economic activities had increased that also resulted in a surge of demand for dollars for import payments.
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No withholding tax on cash withdrawal from July 01
ISLAMABAD: Banks shall not collect/deduct withholding tax on cash withdrawal from July 01, 2021 subject to approval of the Finance Bill by the National Assembly.
The Finance Bill 2021 proposed abolishing levy of withholding tax on cash withdrawals from banking system.
The withholding tax on cash withdrawal was imposed through Finance Act, 2005 in order to bring persons having taxable income but out of tax net.
Initially the withholding tax was imposed at withdrawal of Rs25,000 on all persons making such transaction at 0.5 percent. However, through Finance Act, 2012 this threshold was increased to Rs50,000.
Later, the withholding tax rate was reduced for income tax return filer to 0.3 percent and for non-filer it was increased to 0.6 percent.
Through Finance Supplementary (Second Amendment) Act, 2019 the withholding tax on return filer at the rate of 0.3 percent was abolished and non-filers were required to pay 0.6 percent on making cash withdrawal above Rs50,000 per day.
Now through Finance Bill 2021 proposed to abolish the 0.6 percent withholding tax on persons not on the Active Taxpayers List (ATL) or non-filers.
The changes proposed through Finance Bill 2021 will be applicable from July 01, 2021 subject to the approval from the National Assembly.