Pkrevenue.com

Author: Mrs. Anjum Shahnawaz

  • FBR to reintroduce track and trace system for tobacco products by end-June

    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.

  • Salary income tax brackets to be reduced to five

    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.

  • FBR’s tax collection projected at Rs4,691 billion for current fiscal year

    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

    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.

  • IMF projects Pakistan’s GDP growth at 5pc in FY24

    IMF projects Pakistan’s GDP growth at 5pc in FY24

    KARACHI: International Monetary Fund (IMF) has projected that Pakistan’s GDP growth may grow five percent in 2023/2024 from projected growth of 1.5 percent in the current fiscal year.

    The IMF issued country report on Pakistan’s economy on Thursday.

    According to the IMF real GDP growth is projected to remain subdued at 1.5 percent in FY 2021—consistent with the forecasted course of the pandemic and vaccinations, and global recovery in the WEO baseline— and recover to 4 percent in FY 2022 as the vaccine rollout, confidence, and investment take hold.

    Growth is expected to gradually improve, but only reach its medium-term potential of 5 percent in FY 2024, later than envisioned in the first EFF review, due to the large shock and the need for continued fiscal adjustment, which is expected to offset some of impact of the stronger private sector growth on the overall economy.

    Average CPI inflation is expected to average 8.7 percent in FY 2021 and 8 in FY 2022, as continued high food prices and energy price adjustments outweigh soft international oil prices and weak domestic demand.

    The current account deficit is forecast to widen to 1.5 percent of GDP in FY 2021, as a result of the recovery and it should continue to gradually widen toward 3 percent over the medium term with stronger imports triggered by revived domestic demand and exports.

    However, the market determined exchange rate, together with adequate monetary policy, would help strengthen reserve cover to over 3½ months of imports by FY 2025.

    — Debt is projected to enter a downward path with narrower twin deficits: public debt is forecast to fall toward 70 percent by FY 2026 and total external debt below 40 percent of GDP by FY 2024.

    Substantial risks cloud the outlook, amplified by the Covid-19 pandemic.

    These fall under four broad groups: First, high uncertainty—notably around the global recovery and thus the prospects for growth, trade, and remittances—arises from the second wave of the pandemic and emergence of new strains worldwide.

    These could reverse the current course of the pandemic in Pakistan and require additional mitigation efforts, especially if domestic vaccination efforts were to stall.

    Second, policy slippages remain a risk, amplified by weak implementation capacity and influential vested interests. This particularly affects the fiscal area and thus debt sustainability, including the risk with provinces under-delivering on their commitments to budget parameters.

    Third, failures to meet program objectives, including those related to the authorities’ AML/CFT action plan with the Financial Action Task Force (FATF), could hamper external financing and investment.

    Fourth, geopolitical tensions could increase oil prices and an adverse shift in investor sentiment affect external financing. At the same time, an upside for growth and program objectives arises from the political calendar: with the senate election having taken place in March 2021, there is a window to accelerate reforms until the general elections scheduled for August 2023.

    The Debt Sustainability Analysis confirms that public debt remains sustainable with strong policies, but also points to risks from policy slippages and contingent liabilities.

  • Stock market gains 788 points on positive investors’ sentiments

    Stock market gains 788 points on positive investors’ sentiments

    KARACHI: The stock market gained 788 points on Thursday owing to positive investors’ sentiments on extension in debt servicing by G20.

    The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 44,741 points from previous day’s closing of Rs43,953 points, showing the increase of 788 points.

    Analysts at Topline Securities said that The day kicked off on a positive note and remained positive throughout the day as investors cheered extension in debt servicing by G20 and slight decline in cut-off yields in the T-Bill auction held yesterday.

    This led the market to make an intraday high of 805 points. Initial gains were led by Cements and financial sector.

    TRG closed at its upper circuit contributing the most points in KSE100 Index.

    On the corporate front, Fauji Foundation will not be proceeding with the due diligence process of Silk bank limited, however in another notice HBL has requested SBP’s approval to proceed with the due diligence of the consumer portfolio ( credit cards, running finance and personal loans) of Silk bank.

    Total traded volume and value for the day stood at 383 million shares and at Rs17.97 billion respectively. The volume leader for today was GGL with 35.91 million shares exchanging hands.

  • Country’s foreign exchange reserves ease to $20.679 billion

    Country’s foreign exchange reserves ease to $20.679 billion

    KARACHI: The liquid foreign exchange reserves of the country have declined by $157 million to $20.679 billion by week ended April 02, 2021, State Bank of Pakistan (SBP) said on Thursday.

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  • SRB Appellate Tribunal issues Ramazan timings

    SRB Appellate Tribunal issues Ramazan timings

    KARACHI: Appellate Tribunal, Sindh Revenue Board (SRB) on Thursday issued timings during the holy month of Ramazan ul Mubarak 1442 Hijri.

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  • Dollar weakens to Rs153.02

    Dollar weakens to Rs153.02

    KARACHI: The US dollar weakened to Pak Rupee at Rs153.02 on Thursday owing to lower demand for import payments, dealers said.

    The rupee ended Rs153.02 to the dollar from previous day’s closing of Rs153.18 in the interbank foreign exchange market.

    The dealers said that due to rising case of coronavirus the importers were cautious in placing orders to their foreign suppliers.

    Currency experts said that inflows of foreign remittances and export receipts had helped the local units to make gain against the greenback.

  • HBL to acquire consumer portfolio of SilkBank

    HBL to acquire consumer portfolio of SilkBank

    KARACHI: Habib Bank Limited (HBL) has shown interest to acquire consumer portfolio of SilkBank Limited, according to a statement issued on Thursday.

    An information shared by the SilkBank to the Pakistan Stock Exchange (PSX) revealed that HBL had requested SilkBank Limited to provide its concurrence to HBL to apply to State Bank of Pakistan (SBP) to proceed with the due diligence of the Consumer Portfolio of SilkBank Limited comprising of credit cards, running finance and personal installment loans in order to explore the possibility of HBL’s potential interest in the same.

    The Board of Directors of the SilkBank Limited, in its meeting held on April 07, 2021 has accorded in principle approval, for the same.

    The SilkBank further informed that M/s. Fauji foundation will not be proceeding with the due diligence process of SilkBank Limited, in pursuance of its application in this regard.