KARACHI: Bank Alfalah Limited has reported a significant 19.58 percent increase in its annual profit for the calendar year 2019, driven by a substantial rise in mark-up income. According to the financial results released on Friday, the bank declared an after-tax profit of PKR 12.7 billion, compared to PKR 10.62 billion in the preceding year.
(more…)Author: Mrs. Anjum Shahnawaz
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Fiscal deficit narrows at 2.3% in first half 2019/2020
KARACHI: The ministry of finance on Friday said that the fiscal deficit narrowed at 2.3 percent of the GDP during first half (July – December) 2019/2020 as compared with 2.7 percent in the corresponding half of the last fiscal year.
Analysts at Topline Securities said importantly though, the primary balance during the period clocked in at 0.7 percent of GDP (last year was -0.3 percent of GDP), within the target of 0.6 percent set by the IMF.
In the second quarter of 2019/2020, the fiscal deficit came in at 1.6 percent of GDP compared to first quarter of current fiscal year deficit of 0.7 percent of GDP.
All the four provinces recorded a budgetary surplus during the first half and second quarter of the current fiscal year.
During the first half of 2019/2020, total revenues increased by 39 percent YoY, where the improvement was led by 18 percent YoY higher tax revenues (however less than targeted) and 213 percent YoY higher non-tax revenues.
Looking into further breakup of revenues, government collected 17 percent YoY higher Direct taxes, 24 percent YoY higher Sales Tax and 68 percent YoY higher Petroleum Levy during first half of the current fiscal year.
The government hugely benefited from 575 percent YoY higher profits from State Bank of Pakistan (SBP) in the first half of the current fiscal year (also 31 percent QoQ higher in the second quarter of the current fiscal year), which is around 0.8 percent of GDP.
The fees fetched through the auction of telecom licenses (PTA profits: 607 percent YoY higher in the first half of the current fiscal year) also helped the government achieve the primary balance target.
On the expenditures front, total expenses increased by 26 percent YoY. Current expenditures increased by 25 percent YoY, where Mark-up Payments were up 46 percent YoY and Defense expenses were up 10 percent YoY. Excluding these items, government’s own expenses increased by 17 percent YoY during the first half of the current fiscal year (also up 49 percent QoQ in second quarter of the current fiscal year).
_ The development expenditure remained healthy, where growth of 28 percent YoY was witnessed in 1HFY20 and 122 percent QoQ in 2QFY20.
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Bank Alfalah CEO resigns
KARACHI: Nauman Ansari has resigned from the post of Chief Executive Officer (CEO) and a director of Bank Alfalah Limited, a statement said on Friday.
According to a notification submitted by the bank to Pakistan Stock Exchange (PSX) that Nauman Ansari, CEO Bank Alfalah Limited had tendered his resignation as a director and CEO of the bank due to personal reasons.
“The board of directors of the bank in its meeting held on February 13, 2020 has resolved to accept the resignation of Nauman Ansari.”
The vacancy of the post of CEO will be filled by the board of directors in due course, after completing all legal and regulatory formalities.
“Until that time Nauman Ansari will continue performing his role as President/CEO of the bank,” it said.
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Pak-Turkey joint working group finalizes MoUs on trade facilitation
ISLAMABAD: The Joint Working Group on Trade and Investment of Pakistan and Turkey was held here on Thursday under the 6th HLSCC.
Both sides reviewed the existing bilateral trade and agreed to increase the level of economic engagement to mobilize the untapped potential for increasing trade and investment.
Two MoUs have been finalized by the Joint Working Group: one on Trade Facilitation and Customs Cooperation, and the other to reinforce cooperation in the field of Halal Accreditation.
Both sides agreed to explore the possibilities of enhancing bilateral trade by mutually beneficial market access and trade facilitation.
Both sides also agreed to encourage their businessmen to establish Joint Ventures in Industrial Sectors and cooperate in the field of E-Commerce.
The Ministry of Commerce and Trade Development Authority of Pakistan (TDAP) organised Pakistan-Turkey Business-to-Business (B2B) networking Session on 13th February, 2020 at Islamabad.
The event was formally inaugurated by Sardar Ahmad Nawaz Sukhera, Secretary, Ministry of Commerce.
The Secretary welcomed the delegates and emphasized that the warm bilateral relations need to be translated into economic gains for both countries. Later, Prime Minister’s Advisor for Commerce, Abdul Razak Dawood, also visited the venue and met each Turkish delegate.
He assured them of Ministry of Commerce’s full support for in working in Pakistan and with Pakistani companies.
The B2B meetings were held in the Engineering, Energy, Tourism, Construction, Defence, Automotive, Chemicals and IT sectors. Around 450 fruitful B2B Meetings were conducted between the visiting Turkish Companies and their Pakistani business counterparts.
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FBR to examine transaction records of commercial importers: CCIR
KARACHI: Federal Board of Revenue (FBR) will examine transaction records of commercial importers as they are no more under Final Tax Regime (FBR), Badaruddin Ahmed Qureshi, Chief Commissioner Inland Revenue (CCIR), Regional Tax Office (RTO)-II Karachi said.
He was addressing a seminar on ‘Minimum Tax Implications After the Finance Act, 2019’ organized by Karachi Tax Bar Association (KTBA) on Thursday.
The chief commissioner said that minimum tax was introduced through Finance Act, 2019 with objectives of documentation of economy and realizing actual potential of tax revenue.
He said that previously commercial importers were liable to discharge their liability under the FTR and further they were not required to provide any record.
However, with the introduction of minimum tax the commercial importers will required to provide details of all their goods declaration filed for clearance of their consignments.
Previously, the FTR was available to persons such as commercial importers, commercial suppliers of goods, contractors, persons deriving brokerage or commission income and persons earning income from CNG stations.
The tax collected or deducted from these persons has now been made as minimum tax liability except for exporters, persons winning prizes and sellers of petroleum products.
The chief commissioner said that the taxpayers brought into the minimum tax regime would file their income tax returns and wealth statement for tax year 2020 in September this year.Murtaza Qurban, Executive Manager, EY Ford Rhodes, highlighted the changes related to minimum tax brought through the Finance Act, 2019.
Tax required to be collected on import of goods that are sold in the same condition as they were when imported was treated as final tax.
The Finance Act, 2018 brought a substantive conceptual shift whereby such tax collection was made “minimum tax”.
The Finance Supplementary (Second Amendment) Act, 2019 restored the original position whereby tax collected at import stage from commercial importers was again treated as final discharge of tax liability.
The Finance Act, 2019, however, again introduced amendments through which tax collection at import stage is made “minimum tax” instead of “final tax”.
As a result of this change, Commercial Importers are now required to compute their financial results for comparison of tax on profits with minimum tax.
Pursuant to the above amendments, Commercial Importers are now required to file a return of income instead of a statement in terms of section 115 of the Ordinance.
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FBR extends date to submit stock position up to March 15 for claiming refunds
ISLAMABAD: Federal Board of Revenue (FBR) has allowed taxpayers to submit their stock position for the period July – September 2019 up to March 15, 2020 in order to claim sales tax refunds under newly only verification and issuance system.
In an official memorandum issued on Thursday, the FBR condoned the time limit for filing of Annexure – H for the tax period July – September 2019 up to March 15, 2020.
Annexure-H is a statement for providing stock position by taxpayers along with monthly sales tax return.
The FBR from July 01, 2019 introduced expeditious payment of sales tax refunds within 72 hours subject to the true filing of Annexure – H.
Recently, Karachi Tax Bar Association (KTBA) highlighted this issue and urged the tax authorities to resolve for facilitating exporters and manufacturers.
The KTBA pointed out that as per the amendments made in Sales Tax Rules, 2006 vide SRO no. 918(I)/2019 dated August 7, 2019, mechanism for expeditious processing of refund claim has been devised only for manufacturers-cum- exporters.
As per the Rules, refund will be treated as having been filed only after filing of Annexure H of the Sales Tax return, for which deadline of 120 days has been prescribed in the Rules and the same can be extended for a period of 60 days on the basis of approval from the Commissioner.
However, the rules are silent about the mechanism for processing of Sales Tax refunds in case Annexure H has not been filed by manufacturer-cum-exporter for any reason. Considering the legal and legitimate right of the taxpayer to claim adjustment / refund of the input tax, either of the following two option be considered by the FBR for facilitation of exporters:
Allow filing of Annexure H without any time limit [present time limit of 4 months be abolished and taxpayer be allowed to claim refund as and when required] ii. Incase present limit of 4 months cannot be abolished, registered persons be allowed at least to alternatively file refund on annual basis after the end of the tax year.
Apart from the above, Annexure H is only being allowed to be filed to taxpayers who have filed the said Annexure from sales tax returns of July 2019 and onwards. Instead of claiming refund, some taxpayers have reported sales tax carried forward balance in their sales tax returns from July 2019 onwards. In case they now intend to file Annexure H from the current month,
FBR’s online portal does not allow such taxpayers to enter opening balance of inventory / raw materials as the said field in blocked for editing. This limitation should be removed and taxpayers should be allowed to file Annexure H for any specific month, for which they intend to claim refund.
From apparent mechanism being followed by the system, it appears that those taxpayers who have not filed Annexure H for the month of July 2019 will never be allowed to file Annexure H for any subsequent month. This apparent anomaly should be resolved at earliest.
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Pakistan’s forex reserves increase by $91 million
KARACHI: Pakistan’s liquid foreign exchange reserves have increased by $91 million to $18.735 billion by week ended February 07, 2020, State Bank of Pakistan (SBP) said on Thursday.
The foreign exchange reserves were at $18.644 billion by week ended January 31, 2020.
The foreign exchange reserves of the central bank increased by $157 million to $12.431 billion by week ended February 07, 2020 as compared with $12.274 billion a week ago.
However, the foreign exchange reserves held by commercial banks fell by $66 million to $6.304 billion by week ended February 07, 2020 as compared with $6.37 billion a week ago.
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Stock market ends down by 76 points on profit taking
KARACHI: The stock market fell by 76 points on Thursday owing to profit taking after the market witnessed massive recovery during past two days.
The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 40,455 points as against 40,531 points showing a decline of 76 points.
Analysts at Topline Securities said that the market opened on a positive note on the back of media reports that Pakistan and the IMF have concluded the staff level meeting in which they agreed on not having a mini-budget or reduction in the tax collection target. Alternatively, privatization proceeds are expected to fill the gap.
Index gained to make an intraday high of 256 points but lost momentum; trading sideways for most part of the day, with the index closing at 40,455 level (down 0.19 percent).
Traded volume increased by 9 percent on DoD basis to 197 million shares, whereas traded value decreased by 5 percent on DoD basis to Rs.7.1 billion. UNITY was today`s volume leader with 22.3 million shares.
DGKC announced its 2QFY20 result in which it posted EPS of Rs.1.14 on a consolidated basis. Earnings were considerably higher than expectation on account of higher than expected sales and margin for the quarter, as a result the scrip closed 4.5 percent up.
AKBL and FABL announced their 4Q2020 results in which they posted EPS of Rs.2.1 and Rs.1.06 on a consolidated basis respectively; AKBL also announced a final cash dividend of Rs.1.5/share.
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Rupee ends flat in range bound trading
KARACHI: The Pak Rupee ended flat against dollar on Thursday owing to a range bound trading activity, dealers said.
The rupee ended 154.38 to the dollar from previous day’s closing of Rs154.37 in interbank foreign exchange market.
The dealers said that the market witnessed lackluster demand for dollars from importers and corporate buyers. Further, the inflows of export receipts and workers’ remittances were not sufficient to help the rupee to make gain.
The foreign currency market was initiated in the range of Rs154.38 and Rs154.42. The market recorded day high of Rs154.40 and low of Rs154.38 and closed at the same level.
The exchange rate in open market was remained unchanged. The buying and selling of the dollar was recorded at Rs154.20/Rs154.50, the same previous day’s closing, in cash ready market.
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Values of immovable properties may be enhanced to prevent money laundering
KARACHI: Federal Board of Revenue (FBR) may increase valuation of immovable properties in order to prevent money laundering in the real estate sector.
“In Pakistan the Real Estate sector is one of the biggest sources of money laundering and is used as a parking lot for untaxed as well as ill-gotten money,” the FBR said in an official note.
The sources in FBR said that considering the lower valuation set by the FBR as compared with open market valuation, the FBR values may be enhanced further in future.
Considering the real estate sector as parking lot for untaxed month, a wide range of steps had been taken to restructure the taxation of this sector.
The various steps being taken are as under:-
The Board has issued valuation tables of immovable properties in 21 major cities wherein such properties are valued at a value higher than the DC rates.
The purchasers were required to pay 3 percent tax on the difference between the DC value and FBR value of property to explain the source of investment to the extent of differential between FBR value and DC value.
The rates notified by the Board are still considerably lower than actual market value. It is therefore intended that FBR rates of immovable properties would be taken closer to or about 85 percent of actual market value.
In addition, 3 percent tax for not explaining the source of investment was withdrawn.
As the increase in FBR values of immovable property would increase the incidence of tax on genuine buyers and sellers, the rate of withholding tax on purchase of immovable property has been reduced from 2 percent to 1 percent.
The withholding tax on purchase of property was attracted only if the value of property is more than four million rupees.
The threshold of four million rupees was abolished and withholding tax on purchase is to be collected irrespective of the value of property.
Previously, there was no withholding tax on sale of property if the property was held for a period of more than three years.
Since capital gain is to be taxed under normal tax regime even beyond the period of three years, withholding tax on sale of property would be collected where the holding period is up to five years.
The law imposed restriction on registration or transfer of property having fair market value exceeding rupees five million in the name of a non-filer. The aforesaid restriction placed on purchase of immovable property has been withdrawn.