Pkrevenue.com

Author: Mrs. Anjum Shahnawaz

  • Procedure issued for enrollment with FBR system of AJK/GB registered persons

    Procedure issued for enrollment with FBR system of AJK/GB registered persons

    ISLAMABAD: The Federal Board of Revenue (FBR) on Monday issued standard operating procedure for enrollment with FBR system of persons registered with Azad Jammu Kashmir (AJK) and Gilgit-Baltistan (GB).

    The FBR said that the Sales Tax Act, 1990 mandates a Registered Person (RP) registered with Federal Board of Revenue (FBR) to claim input tax credit on supplies made to RPs registered with Azad Jammu & Kashmir (AJK) Tax Department and vice versa. Rule 161 of the Sales Tax Rules, 2006, however, warrants that RPs registered with AJK Tax Administration to have enrollment with FBR so as to be able to avail the benefits of input adjustments.

    Apart from a few isolated memoranda issued every now and then, no systematic set of instructions have so far been formulated. Similar instructional void exists when it comes to Gilgit-Baltistan (GB) registered persons intending to undertake imports/exports and have to enroll with FBR’s WeBOC System.

    Sub-rule (3) of Rule 161 supra also stipulates that “when the AJK authorities institute e-filing for their registered persons, the adjustment as aforesaid shall only be available against electronic data of supplies as provided to the Board by AJK authorities.” In the intervening period when AJK Tax Department and Pakistan Revenue Automation Limited (PRAL) were negotiating and signing the Service Level Agreement (SLA), cross adjustment of input tax credit was allowed manually. Rule 161(2) warranted all AJK-RPs to “furnish an undertaking that they will provide their supply record and the return filed in AJK” as and when required by the respective RTO or LTO, where their buyers are registered to ascertain correctness of their sales. In anticipation of signing of the SLA between AJK Tax Department and PRAL, manual adjustments stand disallowed.

    Accordingly, it has been decided that hereinafter, in order to ensure certainty, transparency and across-the-board, Standard Operating Procedures (SOPs) are being devised that shall govern enrollment of AJK and GB RPs with FBR systems for all purposes.

    A. Status pre-conditions:

    All AJK/GB taxpayers seeking enrollment with FBR systems for input adjustment and import/export purposes would need to fulfill the following pre-conditions:-

    (i) That, the business is physically located within the territorial boundaries of AJK and GB administrations.

    (ii) That, the business should have been registered with the AJK/GB tax roll.

    (iii) That, the applicant taxpayer must not be involved in a criminal or tax  fraud proceedings at the time of filling of application anywhere in the country.

    B. Application requirements

    (i) The AJK/GB registered persons intending to enroll with the FBR would make a formal request on its letter head to his Commissioner concerned in AJK/GB duly enclosed by a copy of CNICs of owner(s) of the business, and directors and partners in case of an association of persons or a company along with partnership deed for an AOP, and memorandum of articles of association/ Form 29 for companies.

    (iv) A copy of National Tax Number (NTN) certificate issued by the AJK / GB tax department.

    (v) A copy of sales tax registration certificate issued by the AJK/GB tax department.

    (vi) Proof of being active taxpayer with the AJK/GB’s tax department.

    (vii) Online NTN/STRN verification (principal activity manufacturer/importer/exporter from AJK and GB tax department.)

    (viii) A copy of NTN of all directors/partners issued by the FBR in case of limited company/AOPs.

    (ix) Emails and mobile numbers of the lead/authorized director/partner.

    (x) Incorporation number for SECP registered companies.

    (xi) The verification report of premises of the AJK/GB taxpayer/manufacturer must be forwarded internally by commissioner Inland Revenue, AJK or GB, as the case may be.

    (xii) Undertaking /affidavit by the applicant seeking enrollment as regards provision of documents/records, as and when required by the IR field formations for the FBR in terms of Rule 161 of Sales Tax Rules, 2006.

    (xiii) Recommendation of AJK Chamber of Commerce and Industry or GB as the case may be.

    (c) Procedures

    (i) The aforementioned documents shall be accompanied with the verification of manufacturing unit/business by the AJK/GB Tax Department. The AJK/GB shall forward the request electronically to Registration Cell for Enrollment (RCFE) established in FBR for enrollment with FBR automated system. FBR would establish and notify RCFE as and when automated transmission of data is operationalized by AJK/GB, IR department.

    (ii) The RCFE, shall process the application of AJK/GB-RPs in FBR automated system through link as provided by PRAL and generate NTN/STRN in FBR system. The generated NTN/STRN shall be forwarded to IT Wing/PRAL for auto-population in FBR automated system/ WeBOC system with STRN/NTN as issued by the AJK.

    (iii) In case of any discrepancy observed in provided data/documents of applicant by Registration Cell, the same shall be referred back to concerned AJK/GB  department for removal of same.

    The FBR said that the SOPs laid down in this STGO, mutatis mutandis, would also apply to the GD registered persons as and when requirement for the same are met.

  • Exchange companies allowed export foreign currencies on consignment basis

    Exchange companies allowed export foreign currencies on consignment basis

    KARACHI: The State Bank of Pakistan (SBP) on Monday allowed exchanged companies to export foreign currencies other than US Dollars on consignment basis.

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  • SBP allows banks to issue guarantees on behalf of Pakistani firms

    SBP allows banks to issue guarantees on behalf of Pakistani firms

    KARACHI: The State Bank of Pakistan (SBP) on Monday allowed banks to issue guarantees on behalf of Pakistani firms and companies against the back to back / counter – guarantees of banks/development financial institutions (DFIs) rated at least A or equivalent by a credit rating agency on approved panel of the SBP.

    The SBP amended prudential regulations for corporate and commercial banking and decided that banks/DFIs can issue guarantees on behalf of Pakistani firms and companies functioning in Pakistan against the back to back/counter-guarantees of banks/DFIs rated at least ‘A’ or equivalent by a credit rating agency on the approved panel of State Bank of Pakistan.

    Besides, the counter-guarantee of bank/DFI situated in a foreign country is also acceptable if it has the rating of at least ‘A’ or equivalent on global or National Rating scale by Standard & Poor, Moody’s, Fitch, Japan Credit Rating Agency (JCRA) or a local credit rating agency of the respective country provided the guarantee issuing bank in Pakistan is comfortable with and accepts the counter -guarantee of such foreign bank.

    Moreover, subject to the following conditions and limits, banks/DFIs can issue guarantee against the back-to-back/counter guarantee of an unrated, or rated below ‘A’, bank/DFI that is situated in a foreign country:

    (a). The aggregate amount of all such guarantees at any point in time should not exceed 10% of the bank’s/DFI’s own equity as disclosed in the latest audited financial statements;

    (b). The banks/DFIs will have a board of directors (BoD) approved policy having internal limits for acceptance of such counter guarantees based on, inter alia, their own risk appetite and relevant risk factors. The policy may also set more conservative limits than as prescribed in para (a) above. There shall also be instituted a mechanism to monitor such exposures and limits.“

  • Rupee falls by 34 paisas against dollar

    Rupee falls by 34 paisas against dollar

    KARACHI: The Pak Rupee fell by 34 paisas against the dollar on Monday owing to demand for import and corporate payments.

    The rupee ended Rs153.70 to the dollar from last Friday’s closing of Rs153.36 in the interbank foreign exchange market.

    Currency experts said that due to first day of the week the demand for import and corporate payments was high.

    They said that the improved GDP growth forecast would escalate the domestic demand for imported raw material and finished products.

    The rising demand for import payment would depress the local currency in coming days.

  • PTA issues billing advisory for telecom consumers

    PTA issues billing advisory for telecom consumers

    ISLAMABAD: Pakistan Telecommunication Authority (PTA) has issued advisory for telecom consumers to avoid billing shocks while subscribing broadband internet packages.

    The PTA on Sunday said that following options may be considered/exercised to avoid billing issues and avail mobile broadband services at affordable rates/prices:

    — Standard / baseline mobile data (default) rates are generally costly/expensive, therefore, consumers are encouraged to opt/subscribe for daily, weekly or monthly mobile data bundles/packages/offers as they are more affordable / cheaper and provides good value for money.

    — Consumers who do not wish to use mobile internet may change their mobile handset internet settings as follows:

    > click on settings

    > Select network/ SIM cards / internet / mobile data

    > Select SIM card/Mobile Data options

    > Select preferred network type / voice and data

    > select 2G or 3G

    — To void ‘bill shocks’, data connection may be switched off while not in use.

    — Before subscribing any mobile broadband data package / offer/ bundle, “terms and conditions” should be read carefully. Subscription of new or additional bundle may result in removal of existing bundles’ free incentives and resource such as SMS, minutes and data.

    — After activation of any specific offer or package through mobile application, consumers are advised to use the same after receipt of confirmation SMS from operator.

    — In case any complaint related to auto subscription of offer, package or bundle, overcharging, billing related issue, helpline and quality of service etc. consumers can contact concerned operator first. In case of no response from concerned operator, the issue may be escalated to the PTA.

  • Removal of sunset clauses on CGT exemptions for real estate sector demanded

    Removal of sunset clauses on CGT exemptions for real estate sector demanded

    KARACHI: Pakistan Stock Exchange (PSX) has pointed out that at present timelines for exemption from Capital Gain Tax (CGT) are discouraging long-term investors from entering the Real Estate Sector.

    Moreover, different Real Estate Investment Trust (REIT) categorization have created distortion and excluded commercial and mixed-use REIT projects, the PSX highlighted the issue in its proposals for the upcoming budget 2021/2022.

    It further said that higher rate of tax on dividends as compared to mutual funds (enhanced through Finance Act 2019, rate of tax on dividend from REITs Schemes was enhanced from 15 percent to 25 percent.

    Sale of real estate to a REIT scheme at market value is a paper transaction required to transfer title of real estate in the name of trustee.

    Furthermore, REIT Scheme is exempt from income tax when 90% income is distributed as dividend and therefore advance tax cannot be adjusted.

    The PSX proposed exemption from CGT provided in clause 99A, Part 1, 2nd schedule of Income Tax Ordinance, 2001 should be applied to all categories of REITs (mix-use projects)

    – Remove sunset clauses

    • June 2023 for Developmental REIT Scheme and Rental REIT Scheme.

    — Rate of tax on dividend, which is 25% at present, be synchronized with mutual funds15 percent [First schedule, Part-1, Division-Ill, paragraph B]

    — Exempt advance tax on property transfers to/from a REIT Scheme u/s 236C & 236K.

    Giving rational to the proposals, the PSX said it will promote documented real-estate will attract more investments particularly by companies with disclosure of actual prices and income. Revenue impact will be positive as it will generate indirect and additional revenues from allied businesses.

  • Withholding tax exemption sought on commodity future contracts

    Withholding tax exemption sought on commodity future contracts

    KARACHI: Federal Board of Revenue (FBR) has been urged to exempt withholding tax on transactions made for future contracts at commodity exchange.

    The Pakistan Stock Exchange (PSX) in budget proposals 2021/2022 submitted to the FBR, highlighted the issue and stated that currently, buyer of a commodity withholds tax (4 percent-9 percent) from seller before making payment with the exception of growers.

    This tax adds cost and puts the investors at a disadvantageous position when dealing in actual commodity exchange at PMEX in futures contracts/e-WHR5 as grain markets are not documented and as such this tax is actually not being paid.

    The stock exchange proposed to exempt commodity futures contracts and EWRs from the application of section 153 of the Income Tax Ordinance, 2001 like these are exempt from GST under SRO 445(1)12004 June 14, 2004.

    It will be only applicable on physical settlement of futures contract by exchange of delivery of underlying commodity. On contract, CGT is already applicable.

    Giving rationale to the proposal, the PSX said that development of regulated and organized commodity markets will greatly benefit the agriculture sector.

    Revenue impact will be neutral to positive due to adjustability of withholding tax while documentation leading towards more income tax from traders and related parties.

  • Tax rate disparity discourages corporatization: PSX

    Tax rate disparity discourages corporatization: PSX

    KARACHI: Inequality in tax rates for corporate and non-corporate businesses has discouraging corporatization in the country, Pakistan Stock Exchange (PSX) noted in its proposals for budget 2021/2022.

    The stock exchange pointed out that corporate business profits are taxed twice: once at company level at 29 percent and on dividend distribution at 15 percent.

    As compare to 44 percent of total tax in case of companies, unincorporated businesses are being taxed from 0 percent to 35 percent in slabs.

    This inequity in taxation is discouraging corporatization and documentation as unincorporated businesses are subject to substantially lower taxes.

    Absence of clarity in tax laws is causing issues of taxation of Limited Liability Partnerships (LLP5) as companies whereas LLPs are essentially AoPs with perpetual life.

    Therefore, the PSX recommended that inequality of taxation of businesses shall gradually be removed by reducing corporate tax rate/increasing tax rates for AoPs [First Schedule Part 1, Division I, II, hA & Ill]. Rationale

    It said that equality of tax regime will promote corporatization culture leading towards documentation and will therefore generate more tax revenue.

    Adding clarity with respect to status of LLP will encourage more businesses particularly in services sector to opt for this perpetual business structure. It will also help in increasing tax revenue from these segments.

  • FBR enhances refund to export ratio

    FBR enhances refund to export ratio

    ISLAMABAD: Federal Board of Revenue (FBR) has revised the processing parameters and increased refund to export ratio to 15 percent.

    According to Sales Tax General Order (STGO) No. 05 of 2021, the FBR announced to re-fix the ceiling of parametric refund-to-export ratio from the previous 12 percent to 15 percent of the export value for processing of sales tax refunds of the commercial exporters.

    The FBR defined the commercial exporters as those exporters who do not have a manufacturing facility, and are not registered in the manufacturer category under the Sales Tax Act, 1990.

    “This shall be maximum ceiling of admissible refund processed through FASTER against valid exports after confirmation of realization of export proceeds as per rule,” the FBR said.

  • Weekly Review: stocks likely trade in positive on expectation of unchanged policy rate

    Weekly Review: stocks likely trade in positive on expectation of unchanged policy rate

    KARACHI: The stock market likely to remain positive during next week on expectation of no change in policy rate in the monetary policy statement schedule to be announced on May 28, 2021.

    Analysts at Arif Habib Limited said that the market likely to remain positive in the upcoming week.

    With the monetary policy scheduled to be unveiled next week (28th May’21), we foresee the SBP to maintain status-quo on its benchmark policy rate. We believe market performance will be dictated by budgetary expectations while key risk for the medium term remains spike in COVID-19 cases, the analysts said.

    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 15.8x while offering a dividend yield of ~7.2 percent versus ~2.6 percent offered by the region.

    After long Eid Holidays, the market commenced on a positive note given ease in lockdown restriction following drop in COVID-19 cases.

    Moreover, optimistic sentiment also stemmed from the MSCI Semi Annual Review, where Pakistan’s weight witnessed an increase (0.023 percent from 0.016 percent earlier), in lieu of the LUCK and TRG’s addition to the EM Standard Index and Small Index, respectively.

    Meanwhile, favorable budgetary measures for the capital market under the FY22 budget kept the momentum green. Whereas, oil prices (Arab Light) during the week dropped by 4 percent WoW, settling at USD 64.72/bbl. The market settled at 45,915 points, gaining by 740 points (up by 1.6 percent) WoW.

    Sector-wise positive contributions came from i) Cements (139  points) ii) Oil & Gas Marketing Companies (102  points), iii) Fertilizers (90  points), iv) Food & Personal Care Products (89  points) and v) Technology & Communication (64  points). Meanwhile, the sectors that contributed negatively include Commercial Bank (32  points) and Power Generation & Distribution (18  points). Scrip-wise positive contributors were TRG (93  points), UNITY (68  points), LUCK (62  points), MARI (57  points) and ENGRO (46  points).

    Foreign selling continued this week clocking-in at USD 49.4 million compared to a net buy of USD 1.0 million last week. Selling was witnessed in All other sector (USD 43.4 million) and E&P (USD 7.8 million). On the domestic front, major buying was reported by Individuals (USD 37.2 million and Companies (USD 18.1 million). Average volumes arrived at 609 million shares (up by 153 percent WoW) while average value traded settled at USD 137 million (up by 84 percent WoW).