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.
(more…)Author: Mrs. Anjum Shahnawaz
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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).
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SBP decides to retain two-year history of borrowers’ default, delayed payments
KARACHI: The State Bank of Pakistan (SBP) on Friday announced that it will retain credit history of defaulters and delayed payments in Electronic Credit Information Bureau (eCIB) from July 01, 2021.
Currently the eCIB is maintaining the credit history of default and delayed payment of borrowers only for one year.
The SBP in a statement said that from July 2021, State Bank of Pakistan (SBP) has decided to include two years history of negative/overdue information for consumer/individual borrowers’ in the eCIB reports of State Bank of Pakistan in line with international practices. Currently, the eCIB report reflects negative/overdue information for consumer/individual borrowers’ for one year.
Electronic Credit Information Bureau (eCIB ) of SBP collects and collates credit data on borrowers from its member Financial Institutions (FIs). The financial data is then aggregated in system and the resulting information, in the form of credit reports, is made available online to the member FIs for the purpose of credit assessment, credit scoring and credit risk management. The major purpose of this database is to enable the Financial Institutions (FIs) to know the credit history of their current and prospective customers thus enabling them to make informed and timely lending decisions.
The decision was undertaken by the SBP to align its eCIB policies with international practices and to meet the Ease of Doing Business Survey (EODB) requirement of displaying at least two years history in the eCIB reports. The same will help in the enhancement of the credit assessment capability of the member FIs of their current and potential customers.
It is very important to note that this change will be adopted on prospective basis and will be effective from July 2021 onwards. Accordingly, any default, delay in payment, etc. prior to 1st July 2021 will continue to be reflected in the credit report of the customers only for one year. However, defaults, delayed payments, etc. after 1st July 2021 will be shown on the credit reports for two years. All the member FIs are advised to bring the contents of this policy change in the knowledge of their existing and potential customers. Besides, the member FIs should also ensure upfront disclosure to their current and potential customers regarding the eCIB reporting requirement and its implication i.e. (the reflection of overdue/late payments/write off/waiver, etc.) in eCIB reports after settlement of their liabilities.
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Engro Corp approves $31.4m for petrochemical project study
KARACHI: The board of directors of Engro Corporation Limited has approved $31.4 million for commencement of a study on a projected related to petrochemical chemical for future investment prospects.
In an information shared with the Pakistan Stock Exchange (PSX), the company said that the board in its meeting held on April 08, 2021 approved an amount of up to $31.4 million towards conducting engineering, design and technical studies including a Front End Engineering Design (FEDD) study in relation of PDH-PP Project.
The result of these studies, when completed, are expected to inform the final investment decision in relation to this project, which decision will also be based on a conducive policy environment and arranging the right mix of debt and equity partners at such time.
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FBR issues office timings during Ramazan
The Federal Board of Revenue (FBR) has issued special office timings to be observed during the upcoming holy month of Ramazan.
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Dollar eases to Rs152.94
KARACHI: The US dollar fell by eight paisas against the Pak Rupee on Friday owing to foreign inflows of Eurobonds issuance and lower import payment demand.
The rupee ended Rs152.94 to the dollar from previous day’s closing of Rs153.02 in the interbank foreign exchange market.
Currency dealers said that the State Bank of Pakistan (SBP) had received $2.5 billion as proceeds of Eurobond issuance. This transfer helped increase in foreign exchange reserves and ease pressure on the rupee.
Further, they said that importers were remained cautious in placing new orders due to continuous rise on coronavirus cases in the country.
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FBR to reintroduce track and trace system for tobacco products by end-June
KARACHI: Federal Board of Revenue (FBR) may reintroduce track and trace system for tobacco products by end-June 2021 with a new strategy after a higher court declared the earlier system invalid.
According to country report on Pakistan issued by the International Monetary Fund (IMF) on Thursday, the Pakistan authorities through Letter of Intent (LOI) pledged to reintroduce the track and trace system by end-June 2021.
“The procurement procedures related to the track-and-trace licenses to address the smuggling of tobacco products have been declared invalid by the Islamabad High Court (IHC) and the roll-out of the track-and-trace system for tobacco products was suspended,” according to the report.
Nonetheless, and building on the lessons from this experience, the authorities are seeking to reintroduce and roll out the track-and-trace systems for tobacco products by end-June 2021 and will consider its introduction for other items subject to high levels of smuggling, including sugar, drinks, and cement, it added.
The authorities said that that for tax policy measures to be successful and to generate the expected revenues, we need to step up tax administration reforms and enforcement. To this end, we will focus on:
(i) introducing a centralized, risk-based compliance function;
(ii) modernizing the IT system and further advancing automation;
(iii) actively using third-party data, strengthening data cross-checking, and analysis;
(iv) simplifying registration and filing processes;
(v) modernizing audit practices and taking a more targeted audit approach; and
(vi) further strengthening the large taxpayer approach and expanding the activities of the Large Taxpayer Office (LTO).
Additionally, the authorities will continue the process of sales tax harmonization, implement the single return and taxpayer portal by end-June 2021, and launch a Collectible Debt Campaign by end-March 2021 to redress the high percentage of outstanding debt.
To support GST harmonization, the authorities will establish the single filing portal by September 2024.
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Salary income tax brackets to be reduced to five
KARACHI: The government is working on reducing the brackets of salary income tax to five from existing 11 besides reducing the income slabs, according to country report on Pakistan issued by International Monetary Fund (IMF) on Thursday.
Pakistan has assured the IMF to take major initiatives in the upcoming budget 2021/2022. According to the report the Pakistani authorities assured the IMF that in the next step of tax policy reform efforts and to further support fiscal objectives, the government will introduce both a general sales tax (GST) and a personal income tax (PIT) reform with the FY 2022 budget, yielding an estimated 1.1 percent of GDP.
The government may introduce change the existing tax rate structure by reducing the number of rates and income tax brackets from eleven to five and decreasing the size of the income slabs, with a view to simplifying the system and increasing progressivity.
The authorities further pledged to reduce tax credits and allowances by 50 percent (except for Zakat and those provided for disabled and senior citizens).
Besides, they also pledged to introduce a special tax procedure for very small taxpayers, aimed at preventing further tax base erosion and facilitating the formalization of the economy.
The authorities may adopt a long-term strategy to reduce labor informality and to bring additional taxpayers into the PIT net. This reform is expected to yield 0.4 percent of GDP on an annualized basis.
For the broadening and harmonizing the General Sales Tax (GST) base, the authorities assured the IMF through its Letter of Intent (LoI) signed by the finance minister and governor State Bank of Pakistan (SBP) that the government will advance the reforms to our GST system, underpinned by a unified tax base and within the confines of the current constitution.
The authorities pledged the following:
(i) to eliminate all zero-rated goods (Fifth Schedule), except on export and capital machinery goods and move them to the standard sales tax rate;
(ii) remove reduced rates under the Eight Schedule and bring all those goods to the standard sales tax rate;
(iii) eliminate exemptions (Sixth Schedule) excluding a small subset of goods (i.e., basic food, medicines, live animals for human consumption, education and health-related goods) and bring all others to the standard rate; and
(iv) remove the Ninth Schedule to replace a specific tax rate for cell phones with the standard rate. These reforms are expected to yield an estimated 0.7 percent of GDP on an annualized basis.
Moreover, the government is also in the process of harmonizing the service sales tax across provincial jurisdictions, with support from the World Bank, expected to be completed by end-June 2021.
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FBR’s tax collection projected at Rs4,691 billion for current fiscal year
The Federal Board of Revenue (FBR) is facing a projected revenue collection shortfall of Rs272 billion for the current fiscal year, according to the International Monetary Fund (IMF).
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SBP receives $2.5bn of Eurobonds issuance
KARACHI: State Bank of Pakistan (SBP) on Thursday said that it has received government proceeds of $2.5 billion Eurobonds issuance in its account.
The central bank in a tweet said that as a result of current transfers, the SBP’s foreign exchange reserves are closed above $16 billion on Thursday, the highest level since July 2019.
Earlier, a statement issued from Islamabad said that Pakistan had entered the international capital market after a gap of over three years by successfully raising USD 2.5 billion through a multi-tranche transaction of 5-, 10- and 30-year Eurobonds.
The transaction generated great interest as leading global investors from Asia, Middle East, Europe and the US participated in the global investor calls and the order book.
This is for the first time that Pakistan has adopted a program-based approach with registration of Global Medium-Term Note (GMTN) program. The program will allow Pakistan to tap the market at short notice.
The Government intends to make full use of this program and become a regular issuer in the International Capital Markets.