In response to the ongoing COVID-19 pandemic, the Federal Board of Revenue (FBR) announced on Wednesday an exemption from customs duty on the import of oxygen gas and oxygen gas cylinders. This measure aims to ensure the availability of these essential supplies as the country battles the spread of the virus.
(more…)Author: Mrs. Anjum Shahnawaz
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Haroon Rashid elected as President OICCI
KARACHI: Overseas Investors Chamber of Commerce and Industry (OICCI) has elected Haroon Rashid as president of the chamber with effect from July 01, 2020.
Haroon Rashid is Chief Executive Officer of Shell Pakistan Limited. His appointment came following a successful tenure of Shazad Dada, who resigned as the President of OICCI after resigning from Standard Chartered Bank and taking over as President of United Bank Limited.
Irfan Siddiqui has been elected as the Vice President of the OICCI from July 1, 2020. Irfan is the founding President/CEO of Meezan Bank Limited.
He initiated the formation of Al-Meezan Investment Bank in 1997, which was converted into a full-fledged scheduled Islamic Commercial Bank in May 2002 – the first ever Islamic Commercial banking license given in Pakistan.
Commenting on his appointment as the President of OICCI, Haroon Rashid was very upbeat and said, “It is really an honor to have been elected as the President of a prestigious organization like the OICCI, which is the largest chamber in the country in terms of economic contribution, contributing over one third of all government levies and is also the largest foreign investor in the country”.
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Stock market begins new fiscal year with 468 points gain
KARACHI: The stock market gained 468 points on Wednesday to begin the new fiscal year 2020/2021 on positive note.
The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 34,889 points as against 34,421 points showing an increase of 468 points.
Analysts at Arif Habib Limited said that the first day of the financial year 2021 took the index close to 35K level, posting gains of 502 points during the session, mostly inline with regional markets.
Major contributors were Cement (on the back of recent increase in cement price / bag and reduction in FED charges), E&P (due to an increase in international crude prices), OMCs (primarily PSO, which gained from recent increase in retail price, eroding inventory losses at financial year end) and Fertilizer (for reasons of provision of cheap gas for feedstock for few fertilizer companies).
Technology sector realized 78.8 percent shares, followed by Cement (64.4 percent) and Power (44.6 percent). Among scrips, KEL topped 39.1 percent shares, followed by HUMNL (30.7 percent) and TRG (26.5 percent).
Sectors contributing to the performance include Cement (+178 points), E&P (+116 points), Power (+87 points), Fertilizer (+84 points) and O&GMCs (+25 points).
Volumes increased further from 223.3 percent shares to 315.0 percent shares (+41 percent DoD). Average traded value also increased from US$ 44.6 percent to US$ 63.5 percent (+42 percent DoD).
Stocks that contributed significantly to the volumes include KEL, HUMNL, TRG, MLCF and DGKC, which formed 43 percent of total volumes.
Stocks that contributed positively to the index include LUCK (+95 points), HUBC (+68 points), OGDC (+58 points), PPL (+41 points) and ENGRO (+38 points). Stocks that contributed negatively include UBL (-22 points), BAFL (-17 points), MCB (-16 points), BAHL (-14 points), and HBL (-11 points).
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Headline inflation increases by 8.6 percent in June
ISLAMABAD: The headline inflation based on Consumer Price Index (CPI) increased by 8.6 percent on Year on Year (YoY) basis in June 2020 as compared to an increase of 8.2 percent in the previous month and 8.0 percent in June 2019.
Pakistan Bureau of Statistics (PBS) on Wednesday said that on month-on-month basis, it increased by 0.8 percent in June 2020 as compared to an increase of 0.3 percent in the previous month and an increase of 0.5 percent in June 2019.
CPI inflation Urban, increased by 7.6 percent on year-on-year basis in June 2020 as compared to an increase of 7.3 percent in the previous month and 8.1 percent in June 2019.
On month-on-month basis, it increased by 0.7 percent in June 2020 as compared to an increase of 0.3 percent in the previous month and an increase of 0.3 percent in June 2019.
CPI inflation Rural, increased by 10.0 percent on year-on-year basis in June 2020 as compared to an increase of 9.7 percent in the previous month and 7.9 percent in June 2019.
On month-on-month basis, it increased by 1.0 percent in June 2020 as compared to an increase of 0.3 percent in the previous month and an increase of 0.7 percent in June 2019.
SPI inflation on YoY increased by 11.5 percent in June 2020 as compared to an increase of 11.0 percent a month earlier and an increase of 9.3 percent in June 2019.
On MoM basis, it increased by 1.4 percent in June 2020 as compared to an increase of 2.2 percent a month earlier and an increase of 0.9 percent in June 2019.
WPI inflation on YoY basis increased by 0.9 percent in June 2020 as compared to an increase of 1.5 percent a month earlier and an increase of 14.0 percent in June 2019.
WPI inflation on MoM basis decreased by 0.3 percent in June 2020 as compared to a decrease of 2.1 percent a month earlier and an increase of 0.2 percent in corresponding month of last year i.e. June 2019.
Core inflation (NFNE)
Measured by non-food non-energy Urban CPI increased by 6.5 percent on (YoY) basis in June 2020 as compared to an increase of 6.3 percent in the previous month and 7.3 percent in June 2019. On (MoM) basis, it increased by 0.4 percent in June 2020 as compared to increase of 0.4 percent in previous month, and an increase of 0.2 percent in corresponding month of last year i.e. June 2019.
Measured by non-food non-energy Rural CPI increased by 8.8 percent on (YoY) basis in June 2020 as compared to an increase of 8.4 percent in the previous month and 6.7 percent in June 2019. On (MoM) basis, it increased by 0.7 percent in June 2020 as compared to an increase of 0.4 percent in previous month, and an increase of 0.3 percent in corresponding month of last year i.e. June 2019.
Core inflation (Trimmed)
Measured by 20 percent weighted trimmed mean Urban CPI increased by 7.4 percent on (YoY) basis in June 2020 as compared to 6.7 percent in the previous month and by 7.3 percent in June 2019. On (MoM) basis, it increased by 0.4 percent in June 2020 as compared to an increase of 0.4 percent in the previous month and an increase of 0.4 percent in corresponding month of last year i.e. June 2019.
Measured by 20 percent weighted trimmed mean Rural CPI increased by 9.9 percent on (YoY) basis in June 2020 as compared to 8.9 percent in the previous month and by 7.2 percent in June 2019.
On (MoM) basis, it increased by 0.9 percent in June 2020 as compared to an increase of 0.5 percent in the previous month and an increase of 0.7 percent in corresponding month of last year i.e. June 2019.
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Security forces to provide monthly details of confiscated smuggled goods to FBR
ISLAMABAD: Security forces engaged in anti-smuggling activities to submit monthly seizure report to Federal Board of Revenue (FBR).
The FBR issued SRO 578, 579 and 580(I)/2020 to amend Customs Act, 1969 making it mandatory for security forces to furnish monthly report of seizure report to the customs authorities.
The FBR has entrusted Frontier Corps, Pakistan Rangers, Pakistan Maritime Security Agency and Pakistan Coast Guards to exercise the powers of customs authorities in preventing smuggling.
The Pakistan Rangers and Frontier Corps have been authorized to exercise powers of customs officials against smuggling since 2010. Meanwhile, Pakistan Maritime Security Agency and Pakistan Coast Guards was entrusted to exercise powers of customs officials since 2014.
The FBR every year extends the authority in the month of June. Through the latest SROs the FBR extended the powers till June 30, 2021.
As per the SROs the law enforcement agencies are required to provide details of seized goods/vehicles handed over to Pakistan Customs in a month to the Collector of Customs (Enforcement and Compliance) within their respective jurisdiction by 5th day of each month.
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SRB makes mandatory for banks to provide quarterly statement of taxable services
KARACHI: Sindh Revenue Board (SRB) has made mandatory for banking companies to provide quarterly reconciled statement of taxable services provided during the period.
The SRB issued notification No. SRB-3-4/17/2020 effective from July 01, 2020 to make it mandatory for banking and non-banking financing companies to submit quarterly reconciliation of sales taxable services provided or rendered during the period.
The financial institutions are required to provide particulars of services or services related fee, commission, brokerage or charges.
These services are included:
- Branch baking customer free and commission
- Consumer finance related fee and commission
- Card related fee and commission (debit and credit cards)
- Credit related fee and commission
- Investment banking fee and commission
- Commission and fee on foreign trade
- Bill discounting commission and fee
- Commission and brokerage on foreign exchange dealing
- Commission and fee on guarantees, including bank guarantees
- Commission and fee on cash management
- Commission and fee on remittances, including home remittances
- Commission and fee on bancassurance
- Commission on commodity operations
- Commission on handing of federal government or provincial or local government businesses
- Fee or rent of safe deposit lockers and safe vaults
- Services in respect of Hajj and Umrah
- Services in respect of Musharika and Modarba
- Services in respect of utility bills collection
- Services provided as a banker to an issue
- Services provided as a consultant to an issue
- Financial leasing
- Commodity or equipment leasing
- Other leasing
- Services in respect of Ijarah
- Funds management services
- Asset management services
- Advisory services
- Consultancy services
- Other services
The reconciliation should include sales tax withheld by the banking/non-banking financial company as a withholding agent.
Sales tax of the banking/non-banking financial companies services withheld, if any, by others as withholding agents.
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FBR imposes up to seven percent additional customs duty
ISLAMABAD: Federal Board of Revenue (FBR) has started preparation for achieving revenue collection target for fiscal year 2020/2021 as it massively increased additional customs duty up to 7 percent from July 01, 2020.
The FBR issued SRO 572(I)/2020 on Tuesday for levying additional customs duty at different rates of two percent, four percent and seven percent.
The FBR provisionally collected Rs3.957 trillion for fiscal year 2019/2020. As per budget documents the FBR has been assigned to collect Rs4,963 billion during the fiscal year 2020/2021, which is around 25 percent higher than collection of fiscal year 2019/2020..
The government while presenting the budget 2020/2021 had claimed that the budget was tax free and it had not levied any duty and tax in order to provide relief to the masses amid outbreak of coronavirus.
However, as per the notification additional customs duty at two percent has been imposed on goods imported under tariff slabs of zero percent, three percent and 11 percent.
Another rate of four percent additional customs duty has been levied on goods imported under tariff slab of 16 percent.
While the rate additional customs duty at seven percent has been applied on goods imported under tariff slab of 20 percent and above.
However, import of edible crude oil which are subject to import at higher tariff slab, the additional customs duty shall be charged at the rate of two percent, the FBR said.
The FBR further said that additional customs duty would not be applicable on the goods imported under concessionary regime for exporters.
Further, the additional customs duty shall also not be applicable on the contractors and services companies for offshore projects.
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FBR surpasses fiscal year 2019/2020 collection target
ISLAMABAD: Federal Board of Revenue (FBR) has surpassed revenue collection target of Rs3,907 billion for fiscal year 2019/2020, which was significantly lower due to coronavirus adverse impact on the economy.
FBR official spokesman on Tuesday said that the tax authorities had surpassed the downward revised target of Rs3,907 billion and collected Rs3,957 billion be Tuesday evening.
The spokesman said that the gross collection of the FBR also recorded above Rs4,000 billion for the first time in the history. The collection is considerably high considering the adverse impact of coronavirus.
The collection in the month of June 2020 also recorded at Rs411 billion by 3:00PM on June 30, 2020 as against the June target of Rs398 billion.
It is important to note that the FBR had lost around 30 officials due to the pandemic, which also included a grade 22 officer Muhammad Zahid Khokhar.
The FBR praised its officials for their dedication toward revenue collection despite threat of COVID.
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KSE-100 index closes in positive after two consecutive years in red
KARACHI: The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed 2019/2020 with a positive return after two consecutive years in red, portraying a Pak Rupee based increase of 1.5 percent.
Analysts at Arif Habib Limited said that the performance of the fiscal year 2019/2020 is in stark contrast to the last 10-year performance of the benchmark index, which has depicted an average positive return of 15.4 percent.
Key highlights of the outgoing year include:
Macroeconomic concerns were largely controlled before COVID-19 outbreak, especially on the external side [CAD (still under control), currency stability, and building up of FX reserves].
However, post COVID-19 outbreak, the economy slowed down significantly amid introduction of a lockdown and overall decline in consumer spending.
The government announced a fiscal stimulus amounting PKR 1.3tn while the SBP announced various schemes/incentives to support households and industries’ stressed cash cycles alongside a reduction of 625 basis points since March 2020 post COVID-19 to stimulate spending and economic activity.
Profitability declined by -7.2n percent YoY in 9MFY20.
Foreign outflow (USD 279 million) continued for the fifth consecutive year. However, foreigners bought T-bills and PIBs worth USD 688 million.
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SBP extends employment support scheme for three months
KARACHI: State Bank of Pakistan (SBP) has extended the Rozgar scheme for another three months and, in collaboration with the Government of Pakistan, has increased the risk coverage for SMEs under the scheme.
Soon after the outbreak of Covid-19 pandemic, SBP took a number of steps to provide economic support to businesses and households. SBP reduced the financial cost to the private and public businesses and households by reducing the policy rate by a cumulative 625 basis points since 17th March 2020. To improve the cash flow of businesses and households, it allowed deferment of principal amount and restructuring of loans. In addition to these measures, SBP introduced several refinance schemes to support employment and investment to fight the economic impact of COVID-19, the SBP said.
Refinance Scheme to Support Employment and Prevent Layoff of Workers, commonly known as SBP Rozgar scheme: This scheme provides concessional loans to businesses for wages and salaries expenses provided they commit not lay off their employees for the period of the loan. SBP has decided to extend the validity of this scheme by another 3 months to end September, 2020. Businesses will now be able to obtain financing to pay wages and salaries for a maximum period of 6 months starting April 2020 till September 2020.
Effectively, this suggests that not only businesses can obtain loans to fund their wages and salaries bill up to a period of 3 months from July till September 2020, but can also get reimbursement for the wages and salaries paid during April-June 2020. For those who have already availed financing under the scheme, financing limits for the months of July to September 2020 will be calculated on the same basis on which limits were calculated for the months of April to June 2020.
Under the scheme, up till 19th June 2020, financing of Rs 112.8 billion have been approved by banks for 1653 businesses covering wages and salaries of over 1.1 million employees.
The government Risk Sharing Facility under SBP Rozgar Scheme: With a view to incentivize banks/DFIs for financing to SMEs and non SME corporates, Government of Pakistan (GoP) introduced a Risk Sharing Facility (RSF) for SBP’s Rozgar Scheme.
Under this facility, GoP bears 40 percent first loss on disbursed portfolio (principal portion only) for eligible borrowers.
Government of Pakistan has now decided not only to extend validity of its risk sharing facility (RSF) for another three months for SMEs and small corporates with turnover of up to Rs 2 billion but also enhanced risk coverage for SMEs from 40 percent to 60 percent First Loss on portfolio basis.
This higher risk coverage will help banks to provide financing under Rozgar scheme to collateral deficient SMEs which are otherwise struggling hard.
SBP now expects that more SMEs will benefit from the scheme mainly due to higher risk coverage, more awareness of the scheme among the stakeholders and robust support mechanism to address queries and complaints with well organized set up comprising regional focal persons of SBP Offices and banks all across the country. Under the RSF, up till 19th June 2020, financing of Rs 25.4 billion have been approved by banks for around 1100 businesses covering wages and salaries of over 220,000 employees.
It is expected that the above two measures will allow more businesses to benefit from these schemes and thereby support the employment of their employees.