Pkrevenue.com

Author: Mrs. Anjum Shahnawaz

  • Value added textile exporters demand 50 percent reduction in withholding tax

    Value added textile exporters demand 50 percent reduction in withholding tax

    KARACHI: The association of value added textile exporters on Wednesday demanded to reduce the withholding income tax by 50 percent in order to reduce burden on manufacturers and improve country’s foreign exchange earnings.

    In a joint press conference, the exporters demanded the government of restoring Zero Rating – No Payment No Refund System, continuation of Duty Drawback of Taxes (DDT) & Technology Up-gradation Fund (TUF) scheme, reduce WHT rate to 0.5 percent, suspension of Export Development Fund (EDF) surcharge, reduce and fix tariffs of electricity, indigenous gas & RLNG, continuation of duty free import of cotton yarn in the forthcoming Federal Budget 2021-2022.

    Zubair Motiwala, Chairman, Council of All Pakistan Textile Mills Associations; Jawed Bilwani, Chairman, Pakistan Apparel Forum; Tariq Munir, Chairman, Pakistan Hosiery Manufacturers & Exporters Association, Rafiq Godil, Chairman, Pakistan Knitwear and Sweater Exporters Association; Feroze Alam Lari, Chairman, Towel Manufacturers Association of Pakistan; Abdus Samad, Chairman, Pakistan Cloth Merchants Association, Zulfiqar Ch., Chairman, All Pakistan Textile Processing Mills Association; Shaikh Shafiq, Former Chairman, Pakistan Readymade Garment Manufacturers & Exporter Association; Khawaja M. Usman, Former Chairman, Pakistan Cotton Fashion Apparels Manufacturers & Exporters Association, Amin Allana, Chairman, All Pakistan Bedsheets & Upholstery Manufacturers Association, Yusuf Yaqoob, Chairman, Pakistan Weaving Manufacturers Association participated in the Joint Press Conference held at PHMA today.

    The Chairmen of the Value Added Textile Exports Associations apprised that they have submitted Budget Proposals to the Federal Government wherein the top demand is to restore Zero Rating on GST – “No Payment No Refund Regime” through revival of SRO 1125 in letter & spirit as SME exporters have been closed down and decreased by 30% as compared to last year due to imposition of 17% which blocked exporters precious liquidity. They were of the view that the textile exporters are optimistic and hopeful that the Government in the Federal Budget 2021-22 will seriously consider and accept their demands, proposals and recommendations.

    They highlighted that despite COVID19, the textile exports have increased by 17.35% as compared to last year and will InSha-ALLAH reach to US$ 15.50 billion in FY 2020-21 owing to incumbent Government’s pragmatic policies – payments of Drawback of Local Taxes & Levies (DLTL) / Duty Drawback of Taxes (DDT), special / competitive tariff and uninterrupted supply of utilities. They stated that It is on record that due to commencement and payments of DLTL Scheme in 2009, the Textile Exports have increased by 7.3% in 2010 and by 35% in 2011. However, in 2012, textile exports were decreased by 10.66% due to withheld payments of DLTL. Therefore it is most crucial that the Government must continue the DDT scheme for the next five years. They demanded that Duty Drawback of Taxes on Garment, Home Textile & Fabric exports should be provide @ 7%, 6% & 5% respectively on shipment basis for next five years to compete in the international market as competing countries are extending same around 12% to 16%. With commitment, the rates will be increased every year by 1% which means 7%, 6% & 5% in 2021-22, 8%, 7% & 6% in 2022-23, 9%, 8% & 7% in 2023-24 and so on, respectively. Further, Incremental DDT, on an increase of 10% exports over previous year, should also be provided @ 2%. This will bring huge investments in textile sector and shall encourage new-comer exporters to invest in textile sector.

    They said that with the introduction of Technology Up-Gradation Fund (TUF) scheme in 2009, 30% Capacity of Textile Sector has been enhanced. Therefore, it is imperative to reinstate Technology Up-Gradation Fund (TUF) Scheme for next five years. This will bring up-gradation and advancement in technology leading to production enhancement as well as exports. 0.25% Export Development Fund (EDF) Surcharge is deducted from export proceeds of the exporters for export development since 1992. Collection of EDF surcharge is approx. Rs9 billion annually. Presently Govt. has Rs58 billion in its kitty on account of EDF. Hence, they demanded to the Government to suspend collection of Export Development Surcharge till unutilized amount of Rs58 billion of Export Development Fund (EDF) is exhausted. Exporters fall under Final Tax Regime and required to pay 1% WHT of their export proceeds. They demanded that Withholding Tax (WHT) should be reduced from 1% to 0.5% for exporters as this would also help the  exporters in using the cash liquidity for enhancement of the exports.

    The present Government had announced separate tariff of gas and electricity for export sectors with an assurance that this tariff will last for 3 years. However, tariff of gas and electricity was enhanced after a year. To compete in the internationally and capture more markets, it is crucial that tariff of Electricity, Indigenous Gas and RLNG for exporters should be fixed at 7.5 cents/kwh, Rs819/MMBTU and $6.5/MMBTU respectively for next five years and the same should be applied countrywide.

    Owing to historically low cotton production in the country and severe shortage of cotton yarn, on demand of the Value Added Textile Sector, Government has allowed duty free import of Cotton Yarn till 30th June, 2021. We understand that the Government should continue duty free import of cotton yarn until Pakistan’s cotton production reaches to 14 million bales. They recommend that permission for import of Raw Materials and Intermediate Goods for manufacturing of finished goods meant for export under Duty & Tax Remission for Exporters (DTRE) should be automated and allowed to registered Textile Exporters through Ministry of Commerce Textile Industry’s RDA Cell whose licence is renewed after every two years as RDA Cell, Textile Division, Ministry of Commerce has complete details of textile units i.e. production, exports, machinery, exportable items details including HS Codes, Value, Quantity etc. Subsequently, once RDA Cell approves the permission for import of Raw Materials and Intermediate Goods under DTRE and it should be processed on fast track within 48 hours by Customs, accordingly.

    It is pertinent to mentioned that Value Added Textile Exports contribute to around 62% in total exports, provides 42% urban employment particularly to female workforce who mostly are widows and orphans, earns highest foreign exchange and supports approx. 40 allied industries. In this manner, the value added textile industry playing pivotal role to strengthen the economy and prosperity of the country. They were of the view that the exports must remain top priority of the Government as it is the lifeline of economy deserves government’s continuous support. If the Government assures to extend the deserving support to the Value Added Textile Export Sector it has the capacity to achieve the milestone and pledges to enhance its exports by 30% and will reach at US $20 billion in FY2021-22 and shall increase by 25% every year onward 2022-2023 resulting to surplus trade of Pakistan, more foreign exchange earnings & additional employment.

  • SECP suggests measures to document real estate sector

    SECP suggests measures to document real estate sector

    ISLAMABAD: Securities and Exchange Commission (SECP) has submitted its tax proposals for budget 2021/2022 for documenting real estate sector and promotion of Real Estate Investment Trusts (REITs).

    The SECP submitted following suggestions for documenting real estate sector and promotion of REITs:

    (i) Reduce tax on dividend from REITs from 25 percent to 15 percent to synchronize it with mutual funds [First schedule, Part-1, Division-III, paragraph B] of Income Tax Ordinance, 2001.

    (ii) Exempt advance tax on property transfers to/from a REIT Scheme u/s 236C and 236K of Income Tax Ordinance, 2001.

    (iii) Exemption for CGT provided in clause 99A, Part 1, 2nd schedule be applied to all categories of REITs (mix-use projects) without any sun-set clause

    (a) Core objective of the proposals:

    • To support government vision for development of housing sector and allied industries

    • To promote regulated real-estate sector for promoting documentation and transparency

    • To introduce level playing field for regulated sectors

    • To remove disadvantage/dis-incentive caused to the REIT sector (Presently 1 licensed REITs, 4 REITs in pipeline and 9 RMCs registered)

    • To increase overall tax revenue for FBR and provincial revenue authorities

    (b) Direct and indirect impact on tax revenue (impact will be positive)

    • Direct tax revenue for FBR increases; example – Tax revenue of Dolmen City REIT is highest tax being paid compared to any other Mall bigger or of same size. In addition, corporate tax from RMC;

    • Encourages sector to grow thereby, fostering economic activity through allied industries resulting in higher tax collection;

    • Transfer of properties to the REIT structure will also induce proportional tax collection of provincial/local revenue departments;

    (c) Benefit for national economy

    • Promoting economic activity through regulated, documented and transparent models and moving towards formal economy

    • Level playing field for different investment avenues (collective pooled investments through REIT Fund)

    • Investor participation in real estate sector with protection of interests under the REIT law vis-a-vis, falling prey to unregulated real estate sector mushrooming in the market

    • Increase in revenue for the federal and local governments;

    • Disclosure and taxation of property transactions at market value instead of DC rates

    • Job creation related to construction, real estate and allied industries;

    • Broaden the investor base and size of capital markets;

    • Due to mandatory listing, small savers can share profits arising from real estate industry (which currently not available) – tax revenue from trading at stock exchange + CGT.

  • Rupee gains nine paisas against dollar

    Rupee gains nine paisas against dollar

    KARACHI: The Pak Rupee gained nine paisas against the dollar on Wednesday on inflows of the foreign currency during the day.

    The rupee ended Rs155.69 to the dollar from previous day’s closing of Rs155.78 in the interbank foreign exchange market.

    Currency experts said that the inflows of export receipts and workers’ remittances helped the rupee to make gain during the days.

  • Sales tax rates slashed on kerosene, light diesel

    Sales tax rates slashed on kerosene, light diesel

    ISLAMABAD: The government has announced cut in sales tax rates on kerosene oil and light diesel in order to absorb the price hike on petroleum products.

    In this regard the FBR issued SRO 726(I)/2021 on Tuesday to comply with the decision of the government for keeping the POL prices intact by absorbing a hike in prices through downward adjustment in sales tax rates.

    The sales tax rate on kerosene oil has been reduced to 10.07 percent from the previous rate of 15.44 percent. Similarly, the sales tax rate on light diesel oil has been reduced to 3.67 percent from 7.56 percent. Meanwhile, the sales tax rates on petrol and high speed oil have been kept unchanged at 17 percent.

    According to an official statement issued on May 31, 2021, the prime minister had decided to maintain the prices of petroleum products as they were on May 17, 2021.

    “The government has not increased the prices of petroleum products since April 16, 2021 by adjusting sales tax and petroleum levy so that there is no corresponding increase in the prices of essential items and maximum relief is provided to the common man.”

  • SBP allows mentally disordered persons to open bank account

    SBP allows mentally disordered persons to open bank account

    KARACHI: State Bank of Pakistan (SBP) has allowed mentally disordered persons to open bank account through a well-defined account opening process, a statement said on Tuesday.

    The process has been devised after thorough consultation with stakeholders. Now, for the first time in Pakistan, mentally disordered persons will be able to open a bank account under a new category of customers account namely “mentally disordered person account” introduced by SBP in its AML/CFT/CPF regulations.

    State Bank has advised all banks to facilitate the mentally disordered persons by allowing them to open and maintain a bank account with the help of a court appointed manager as per the applicable laws related to mental health.

    Account opening process will include presentation of valid identity documents and biometric verification through NADRA of mentally disordered person and court appointed manager.

    Moreover, bank will verify certified true copy of court order to ensure authenticity of the appointed manager. All CDD requirements should be completed for both persons to meet AML/CFT/CPF Regulations.    

    It may be recalled that SBP has earlier taken several measures and initiatives in consultation with banking industry for Persons with Disabilities like giving special consideration for their employment and improvement in accessibility infrastructure such as ramps and wheelchair facilities in their branches.

    SBP has also made available subsidized financial facilities and credit guarantee schemes for differently abled persons.  All these measures are being undertaken under a broader objective of improving financial inclusion in the country.

    SBP’s current step along-with a new comprehensive financial inclusion policy for Persons with Disabilities to be unveiled shortly by SBP will pave the way for universal financial inclusion including those of marginalized segments.

  • KCCI welcomes appointments of appellate tribunal members

    KCCI welcomes appointments of appellate tribunal members

    KARACHI: Karachi Chamber of Commerce and Industry (KCCI) on Tuesday welcomed the decision to appoint members of appellate tribunals.

    Shariq Vohra, President, KCCI in a statement congratulated the Justice of Pakistan Justice Gulzar Ahmed, Prime Minister Imran Khan and Law Minister Dr. Farogh Naseem for selecting Judicial Members in the Customs Appellate Tribunal and the Appellate Tribunal Inland Revenue all over Pakistan.

    President KCCI hoped that the appointments would help expedite recovery of stuck-up revenues and will be a remedy for dealing with the menace of harassment suffered by the taxpayers.

    “The Karachi Chamber of Commerce wishes success to the new appointees in performing their national duties,” he added.

  • CCP directs DHA to give ROW to Nayatel

    CCP directs DHA to give ROW to Nayatel

    KARACHI: Competition Commission of Pakistan (CCP) on Tuesday directed the management of Defence Housing Authority (DHA) – I Islamabad to provide a level playing field for Nayatel by giving right of way (ROW) to provide its cable internet and telephony services on the same terms and conditions as are being offered to other existing operators.

    The CCP conducted an enquiry after taking a suo motor notice of the complaints and concerns received from the residents of DHA-I Islamabad, stating that had been deprived of an alternate choice of CIT services provider, which was restricted to only two operators i.e. Pakistan Telecommunication Company Limited (PTCL) and DHAI Teleman.

    They alleged that DHA was not letting Nayatel to operate in the area despite the company’s interest to provide its services.

    The ROW is a platform for internet service providers for the provision of CIT services.

    According to the complaints, DHA management had given ROW to PTCL and DHAI Teleman in DHA-1 while denying the same to Nayatel on equal terms and conditions.

    It was alleged that DHA’s management had created a barrier to entry for Nayatel by offering dissimilar conditions and demanding a higher price of ROW that the already existing internet service providers.

    The CCP’s enquiry concluded that DHA management, prima facie, abused its position in violation of Section 3 of the Competition Act, 2010 by not allowing Nayatel to operate in the relevant market and recommended to initiate proceedings against DHA under Section 30 of the Act.

    After hearing the parties, the bench passed the order, in which it applied the ‘essential facility doctrine’ to the matter and observed that in the current era, the CIT services are an essential need for the citizens, both for personal as well as commercial use.

    The order further stated that the residents of DHA-I were demanding CIT services from Nayatel, being a Fiber-to-the-home (FTTH) based CIT service provider, however, DHA-I management, abusing its dominant position, refused to issue an NOC to Nayatel to install its infrastructure within DHA-I Phase-I and other sectors.

    As per the order DHA-I held a dominant position in the relevant market and had already granted ROW to four parties i.e. PTCL, Transworld, Wateen and its very own subsidiary DHAI Teleman for providing (G-PON) and allied CIT services to the residents of DHA-I, the lincensee seeking the ROW was Nayatel.

    The already existing service providers are on cost sharing basis with DHA-I rather than on a revenue sharing basis. The order observes that DHA-I has failed to explain any logic as to why there has been a disparity between the charges offered to Nayatel and other incumbents, which amounts to discrimination and application of dissimilar conditions to the same transaction, under Section 3(I), read with subsection 3(e) of the Act.

    The order also finds support from the directive issued by the ministry of information technology and telecommunications in October 2020, called the “public and private right of way policy directive” which stated that ‘the public authority shall not discriminate any licensee towards charging of right way fee and there shall not be any differential or preferential treatment in right of way fee for any type of licensee including other utility service providers and those wholly or partially owned by the federal or provincial government or the public authority.

    Keeping in view all circumstances and with a view to give a chance to DHA-I to correct its behavior and to offer Nayatel within 90 days from the date of the order to use the ROW on terms and conditions no less favorable than the incumbent service providers.

    The CCP has not imposed any penalty on DHA for now. But in case of non-compliance, DHA-I shall be liable to pay Rs2 million for violating Section 3 of the Competition Act, 2010 in addition to appropriate penalties for non-compliance under Section 38 of the Act.

    DHA-I has been further directed to file a compliance report before the registrar of the commission no later than 7 days from the date such offer is made to Nayatel.

  • ACCA suggests imposing income tax on landowners

    ACCA suggests imposing income tax on landowners

    KARACHI: The Association of Chartered Certified Accountants (ACCA) has suggested the government to impose income tax at 7 percent on landowners to increase the agriculture share in the GDP.

    The ACCA in its proposals for budget 2021/2022 stated that agriculture (recently growing at 2.77 percent) has the potential to reach up to 55 percent of the GDP from the current levels of around 24 percent.

    “There’s a need for large landowners to be taxed at minimal rates, i.e. 7 percent,” it added. The revenue generated through this should be used to subsidise seeds, fertiliser, water, electricity, fuel, etc. for the small farmers. The use of latest, sustainable farming technology and easy access to cheap or interest-free loans should be ensured.

    It urged the government to reduce tax rates to a single digit and ensure broadening of the tax net by adopting Data Analytics and Artificial Intelligence leveraging rich data sources at government’s disposal such as NADRA.

    The proposals also talk about the importance of moving away from indirect taxes and calls for rationalisation, standardisation and automation of tax laws & administration to minimise harassment of taxpayers.

    The suggested structural reforms include harmonisation of federal and provincial tax laws, issuance of a single tax return, reduction in the discretionary powers of tax authorities, predicating appraisals of FBR functionaries on growth of business sectors under jurisdiction to instil a mindset of using tax as a means for GDP growth, incentivising tax payers to promote a tax culture, and establishing an independent appellate forum at Commissioner Appeals level.

    The proposals also hope for the government to have a long-term strategy for import substitution, call for more incentives to local industry and favours heavy duties on non-essential imports and luxury items. Tax benefits to businesses pioneering UN’s SDGs have been recommended.

    The negative growth in sectors such as mining and quarrying (-6.49 percent) and electric generation (-22.96 percent) is also highlighted for the government to take immediate action.

    Proper legislation and rationalisation can help improve the situation for mining and can also result in attracting FDI. Focus on bringing down line losses, improving energy mix with clear plan for transition to renewables, as well as revising the existing costly agreements, can help reduce the negative trend for the electricity generation.

    The document lauds government’s interventions such as Roshan Digital Account and incentives to the construction sector and mega projects such as Ravi Riverfront and calls for their continuation and further enhancements.

    The global body has shown concern about the growing unemployment (11.56 percent) among the youth aged 20-24 and urges government to make youth employment one of the focus areas with considerable spending in the budget 2021-2022.

    Further innovations in the Kamyab Jawan programme and introduction of new skills development and entrepreneurship support programmes with focus on emerging technologies should be government’s priority.

    Significant increase in education budget with new programmes by provinces to support girls’ education, as well as adequate spending towards health and communications infrastructure, has been termed the ‘need of the hour’ by the global body. ‘Facilitation of high broadband penetration is critical for the future-fitness of our education sector and public services delivery,’ said ACCA.  

    Segmented approach in programmes such as Ehsas to ensure benefits reach the most marginalised segments of community across the country should be adopted for an inclusive growth.

    Close collaboration with the IT/ITeS sector is needed, and the sector should be offered with tax rebates to facilitate its expansion. Similar to CPEC, it’s believed that there’s a potential for something like ‘China-Pakistan Technology Zone’ to connect our innovation value chain with economies in the region.

    It’s also pointed out that the past outstanding refunds have only been cleared partially. It’s important to strengthen the trust of the taxpayer as well as provide liquidity to businesses, especially at a time when businesses are recovering from the effects of the pandemic.

    It’s reiterated that government needs to ensure openness and transparency to foster trust and cultivate a healthy tax culture in the country.

    ACCA has also confirmed that it will be holding a number of seminars to discuss its budget proposals engaging country’s top business leaders and policy makers.

  • Stock market sheds 155 points on selling pressure

    Stock market sheds 155 points on selling pressure

    KARACHI: The stock market witnessed a decline of 155 points on Tuesday mainly on selling pressure during the day. The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 48,148 points as against previous day’s closing of 48,303 points, showing a decline of 155 points.

    Analysts at Arif Habib Limited said that the market slumped today while bearing selling pressure that began yesterday.

    Increase in cement price / bag helped Cement stocks trade in green, whereas KAPCO saw price moving up on the notification of board meeting to consider interim dividend.

    On the other hand, TRG contributed to downside in Index due to concerns over minimum global tax as envisaged by EU and US. Among scrips, WTL topped the volumes with 400 million shares, followed by BYCO (37.8 million) and HUMNL (35.1 million).

    Sectors contributing to the performance include Technology (-72 points), O&GMCs (-41 points), Textile (-29 points), E&P (-19 points) and Refinery (-13 points).

    Volumes increased from 936.1 million shares to 1,040.5 million shares (+11 percent DoD). Average traded value however declined by 14 percent to reach US$ 153.4 million as against US$ 177.7 million.

    Stocks that contributed significantly to the volumes include WTL, BYCO, HUMNL, TPLP and PTC, which formed 52 percent of total volumes.

    Stocks that contributed positively to the index include KAPCO (+29 points), HBL (+14 points), MCB (+12 points), DAWH (+12 points) and BAHL (+8 points). Stocks that contributed negatively include TRG (-74 points), PSO (-24 points), OGDC (-14 points), SNGP (-13 points) and KTML (-8 points).

  • Rupee weakens by 47 paisas against dollar

    Rupee weakens by 47 paisas against dollar

    KARACHI: The Pak Rupee ended down by 47 paisas against the dollar on Tuesday owing to year end demand for corporate and import payments.

    The rupee ended Rs155.78 to the dollar from previous day’s closing of Rs155.31 in the interbank foreign exchange market.

    Currency dealers said that the market witnessed higher demand for dollar as corporate sector and importers were seen busy in buying the foreign currency for their payments.

    The dealers said that due to fiscal year 2020/2021 is ending June 30, 2021 the demand of the foreign currency usually high as corporate entities repatriate profit and dividends.