Pkrevenue.com

Author: Mrs. Anjum Shahnawaz

  • SBP expands economic refinance facility to existing projects

    SBP expands economic refinance facility to existing projects

    KARACHI: State Bank of Pakistan (SBP) on Friday expanded the economic refinance facilities to existing projects in order to provide relief the industry to dilute impact of coronavirus.

    The SBP issued the scheme on March 17, 2020. On the basis of feedback from stakeholders, State Bank has decided to expand the scope of subject facilities.

    Accordingly, in addition to the new projects, existing projects/ businesses are being allowed to avail financing under these Facilities for undertaking Balancing, Modernization and Replacement (BMR) and/or expansion of their projects/ businesses.

    However, to ensure proper utilization of the Facilities, banks/ DFIs and borrowers are required to ensure the following:

    As per TERF’s/ITERF’s eligibility criteria, financing for BMR/expansion will only be available for purchase of new imported and locally manufactured plant & machinery against foreign LC and inland LC, respectively. Second-hand machinery, land or civil works are not covered under the Facilities.

    Banks/DFIs will be required to make disbursements to their customers on the basis of certificates of their Internal Audit confirming that financing is within the terms and conditions laid down in the Facilities. A copy of the said Internal Audit Certificate shall be submitted to the concerned office of SBP BSC (Bank) at the time of availing refinance for the first time for a project/ business while copies of certificates in respect of subsequent disbursements may be submitted at the time of availing last refinance for the same project/ business. In case of consortium finance the lead bank will be required to submit the certificate.

    The borrowers concerned will be required to submit a report from PBA’s approved surveyors (acceptable to bank/DFI concerned) with regard to confirmation that the newly purchased plant & machinery has been installed as per their initial request/proposal for BMR/expansion. In case of installation/fixation in part, this report will be required at first and final installation of the plant/equipment.

  • Stock market ends flat amid narrow range trading

    Stock market ends flat amid narrow range trading

    KARACHI: The stock market ended down by 36 points on Friday after narrow range trading.

    The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 33,267 points as against 33,304 points showing a decline of 37 points (-0.1 percent DoD).

    Analysts at Arif Habib Limited said that KSE-100 traded in a narrow range between +197 points and -145 points, closing the session -36 points.

    The session low volumes as well compared with recent past sessions.

    Selling pressure was evident in Banks, E&P and Cement sectors. International oil prices had little impact on investor sentiment, which is affected more from upcoming MSCI rebalancing.

    Cement sector led the volumes with 15.7 million shares, followed by Technology (11.3 million) and O&GMCs (11.1 million). Among scrips, UNITY realized 9.3 million shares, followed by HASCOL (5.8 million) and MLCF (5.5 million).

    Sectors contributing to the performance include Banks (-50 points), Fertilizer (-29 points), Autos (-12 points), O&GMCs (+32 points), Power (+25 points), Food (+20 points).

    Volumes declined from 175.8 million shares to 88.0 million shares (-50 percent DoD). Average traded value also declined by 51 percent to reach US$ 23.9 million as against US$ 46.8 million.

    Stocks that contributed significantly to the volumes include UNITY, HASCOL, MLCF, HUMNL and TRG, which formed 34 percent of total volumes.

    Stocks that contributed positively to the index include HUBC (+27 points), NESTLE (+26 points), SNGP (+19 points), PAKT (+12 points) and PSO (+6 points). Stocks that contributed negatively include LUCK (-17 points), UBL (-13 points), ICI (-12 points), ENGRO (-11 points), and HBL (-10 points).

  • Foreign investors urge controlling Afghan transit trade

    Foreign investors urge controlling Afghan transit trade

    KARACHI: Foreign investors have urged the authorities to control Afghan Transit Trade to avoid incidence of smuggling and protect local industry.

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  • OICCI suggests harmonization of sales tax on goods, services

    OICCI suggests harmonization of sales tax on goods, services

    KARACHI: Overseas Investors Chamber of Commerce and Industry (OICCI) has recommended harmonization of sales tax on goods and services and should be set at 13 percent as applicable in Sindh province.

    The OICCI in proposals for budget 2020/2021, said that the sales tax rate in Pakistan, at 17 percent, is the highest in Asia. Our analysis shows an average of less than 12 percent in Asia, with a range of 6 percent to 17 percent.

    Moreover different rates of sales tax on goods and services i.e. standard, reduced, specified etc. prevailing in the country lead to a number of issues for business organizations operating all over the country.

    Sales tax rates (federal and provincial), both on goods and services, should be harmonized throughout the country and be aligned to 13 percent charged in Sindh.

    Moreover only one Tax return should be filed with FBR.

    The OICCI highlighted the issue of admissibility of Input sales tax on civil work and other equipment and materials.

    Adjustability of input sales tax restricted under section 8(1)(h) & (i) of Sales Tax Act, 1990 and SRO 490(I)/2004 on building material, office equipment, furniture & fixtures, vehicles & their parts used for taxable activity purposes has increased the cost of doing business for all documented sectors, and encourages procurement from un-registered sector whereby 17 percent sales tax cost is mitigated with only 5 percent sales tax withholding.

    The OICCI recommended that Sub-Section (1)(h) and (i) of section 8 of STA 1990 should be deleted.

    SRO 490(I)/2004 which is in contradiction with section 8 should also be rescinded.

    The overseas chamber pointed out the issue of sales tax be applied at the time of delivery, instead of Earlier of Receipt of Payment or Delivery of Goods.

    It said that prior to amendment made in section 2(44) of Sales Tax Act, 1990, vide Finance Act, 2013, sales tax was levied at the time of actual delivery of goods regardless of time of payment.

    Application of sales tax on advances causes serious operational issues and also leads to unnecessary reconciliations resulting in hardships to taxpayers.

    The OICCI recommended that sales tax be applied at the time of actual delivery for ease of doing business, rather than earlier of receipt or delivery.

    The OICCI said that as per serial no. 1 and 2 of Eleventh Schedule of Sales Tax Act, 1990, Government departments/ bodies/ authorities and Companies as defined in ITO 2001 are required to withhold sales tax against supplies made by registered and active sales taxpayers. This is only creating hardship for registered sales tax persons as Government departments are not making withholding sales tax payments through FBR web-portal system and deductions made by Companies like leasing companies, Modarabas, etc who are not registered in STA 1990 and FBR does not allow any manual entry of such withholding sales tax.

    After implementation ‘STRIVe’ from July 2016 onwards, no mismatch arises between input and output tax for transactions with registered sales tax persons.

    Therefore, withholding sales tax on purchases made by Government departments/ bodies/ authorities or unregistered taxpayers, etc. from registered sales tax persons being active taxpayer is only creating hassles and unnecessary documentation for tax payers.

    It is recommended to abolish serial no. 1 and 2 of Eleventh schedule of STA 1990.

    Sales tax SRO’s are issued so frequently that it is very difficult to keep oneself updated with respect of different SRO’s and it’s also difficult to identify the current applicable SRO.s

    All active SRO’s should be made part of the Act. Subsequently in every budget, SRO’s issued during the previous year, should also be made part of the Act.

    Joint and several liability of registered persons in supply chain where tax remains unpaid.

    As per section 8A of Sales Tax Act, 1990 a registered person purchasing goods is jointly and severally liable if the sales tax is not paid by the seller of the goods. It is quite unjustified to punish a genuine buyer for an offense committed by corresponding supplier. This section is also inequitable as payments are made after verifying the seller status on the FBR portal at the time of purchase.

    It is recommended that Section 8A of the Sales Tax Act, 1990 should be abolished.

    As per section 8B a registered person is not allowed to adjust input tax in excess of 90 percent of the output tax for that period in STA 1990.

    It is recommended that section 8B of the STA 1990 should be abolished for registered taxpayers. Most industries have long term import contracts with international suppliers. Due to current COVID pandemic situation, sales of companies have reduced significantly and resultantly, input tax is getting accumulated as full adjustment of input taxes against output tax is not possible.

  • Reviewing withholding tax on profit on debt suggested

    Reviewing withholding tax on profit on debt suggested

    KARACHI: The tax authorities have been suggested to review withholding tax rates on profit on debt in forthcoming budget.

    Overseas Investors Chamber of Commerce and Industry (OICC) in proposals for budget 2020/2021 said that through Finance Act, 2019, multiple withholding tax rates of profit on debt were introduced which are based on the profit threshold and active /in-active status of taxpayer (i.e. Profit less than Rs0.5 million is subject to tax at the rates 10 percent and 20 percent for active and in-active respectively.

    Whereas, profit greater than Rs 0.5 million is subject to tax at the rates 15 percent and 30 percent for active and in-active filer respectively).

    It has been provided that minimum tax rate on profit on debt is 15 percent as prescribed under section 7B of Income Tax Ordinance, 2001.

    So, there is no need to tax the profit at reduced rate (i.e. 10 percent), if the person has to discharge his final tax liability on such higher rate i.e. 15 percent.

    The OICCI suggested that prescribed threshold of withholding tax on profit should be deleted and there should be only two rates, for active and inactive taxpayers respectively.

  • FBR proposed revamping withholding tax regime, reducing to five rates

    FBR proposed revamping withholding tax regime, reducing to five rates

    KARACHI: Federal Board of Revenue (FBR) has been proposed to revamped withholding tax regime and reduced the number of withholding tax rates to maximum five.

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  • Telenor awarded Rs588 million contract for providing hi-speed broadband

    Telenor awarded Rs588 million contract for providing hi-speed broadband

    ISLAMABAD: The Universal Service Fund (USF) has awarded contract worth Rs588 million to Telenor Pakistan for providing hi-speed broadband in Sanghar Lot (Sindh).

    Federal Minister IT & Telecom, Syed Amin ul Haque inaugurated the Next Generation Broadband for Sustainable Development project in Sanghar (Districts of Sanghar and Umerkot) at a ceremony held at Ministry of IT & Telecom on Thursday.

    The contract was signed by Haaris Mahmood Chaudhry, CEO USF and Irfan Wahab Khan, CEO Telenor Pakistan. Secretary IT, Shoaib Ahmad Siddiqui was also present at the ceremony.

    Chief Guest of the ceremony, Syed Amin ul Haque stated that under the vision of Digital Pakistan, the Ministry of IT & Telecom is taking concrete steps to spread the benefits of digitalization to the masses.

    He said that during the spread of Coronavirus, Ministry of IT & Telecom will keep on making efforts to ensure that broadband connectivity helps us overcome this crisis.

    He added that the key stakeholders in IT & Telecom sector should work together vigorously to come up with innovative ways for fighting against Covid 19 through technology.

    He congratulated the teams of USF and Telenor Pakistan and also hoped that they will continue to achieve these milestones in future as well.

    While sharing his views at the ceremony, Shoaib Ahmad Siddiqui said that the main objective of USF is to facilitate the masses through broadband technology in the country.

    He added that during the coronavirus pandemic, Ministry of IT & Telecom is making sure that broadband connectivity plays an integral part in creating ease for people.

    He further said that USF projects are already making a huge difference in lives of people and with the new challenging scenario during the spread of coronavirus, these projects have become more crucial for socio-economic benefit.

    Also speaking at the ceremony, Haaris Mahmood Chaudhry, CEO USF informed that Federal Minister, Syed Amin ul Haque, Secretary IT, Shoaib Ahmad Siddiqui and USF Board of Directors have been giving constant guidance and support to USF for making rapid progress.

    He also added that all these projects are playing an integral role in enabling people of Pakistan to carry on their activities through broadband technology during the Covid 19 pandemic.

    Through the project in Sanghar lot, broadband coverage will be provided in 500 mauzas in Sanghar, covering an approximate unserved area of 12,000 sq. km and benefitting a population of 1.47 million people.

    Sharing his views on the development, Irfan Wahab Khan, CEO Telenor Pakistan said, “We are more committed than ever before to strengthen the pillar of connectivity as part of our purpose of connecting people to what matters most to them.

    “At Telenor Pakistan we are driven to empower the country through enhanced connectivity, creating opportunities and uplifting the lives of millions and stand firm in our commitment to break socio-economic barriers through the use of mobile technology.”

    Senior officials of the Ministry of IT, USF and Telenor Pakistan were also present at the ceremony.

  • Foreign exchange reserves increase by $292 million to $18.75 billion

    Foreign exchange reserves increase by $292 million to $18.75 billion

    KARACHI: Pakistan’s foreign exchange reserves of the country have increased by $292 million to $18.755 billion by week ended April 30, 2020, State Bank of Pakistan (SBP) said on Thursday.

    The total foreign exchange reserves were at $18.463 billion a week ago.

    The official reserves held by the central bank increased by $259 million to $12.329 billion by week ended April 30, 2020 as compared with $12.07 billion a week ago.

    The reserves held by commercial banks also increased by $33 million to $6.426 billion by week ended April 30, 2020 as compared with $6.393 billion a week ago.

  • Share market falls by 424 points on profit taking

    Share market falls by 424 points on profit taking

    KARACHI: The share market fell by 424 points on Thursday as profit taking witnessed which resulted in selling pressure during the day.

    The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 33,304 points as against 33,728 points showing a decline of 424 points.

    Analysts at Arif Habib Limited said that the market opened on a negative note today and could only manage to pull back into green for a brief time, before plunging due to selling pressure.

    Regardless of what the international crude prices are trading at, local E&P and O&GMCs which responded positively to the ascend in international crude prices last week, remained oblivious to further price gains.

    Profit booking is clearly on investors mind, who have so far been cashing out from Fertilizer, Cement, E&P and O&GMCs.

    Banks, on the other hand, which have weathered the flow from foreign investors (possibly due to MSCI rebalancing), showed initial signs of recovery on the prospect of expectation of status quo in the upcoming monetary policy.

    This is reflected by the yield change in secondary market for 10yr PIBs, which marked a low of 7.64 percent on April 17, 2020 and have since then recovered to 8.23 percent today, indicating that there may be a status quo on policy rate.

    Cement sector led the volumes with 41.8 million shares, followed by Banks (19.1 million) and O&GMCs (18.9 million). Among scrips, HASCOL topped with 16.1 million shares, followed by MLCF (12.6 million) and DGKC (8.2 million).

    Sectors contributing to the performance include E&P (-127 points), Cement (-56 points), Power (-54 points), Fertilizer (-41 points) and O&GMCs (-39 points).

    Volumes declined from 208.9 million shares to 175.8 million shares (-16 percent DoD). Average traded value on the other increase by 4 percent to reach US$ 46.8 million as against US$ 45.1 million.

    Stocks that contributed significantly to the volumes include HASCOL, MLCF, DGKC, UNITY and FCCL, which formed 30 percent of total volumes.

    Stocks that contributed positively to the index include UBL (+28 points), HBL (+24 points), EFUG (+11 points), SYS (+8 points) and MTL (+5 points). Stocks that contributed negatively include OGDC (-51 points), PPL (-48 points), HUBC (-44 points), LUCK (-34 points), and BAHL (-28 points).

  • Meezan Bank maintains deposit base at Rs928 billion

    Meezan Bank maintains deposit base at Rs928 billion

    KARACHI: The Board of Directors of Meezan Bank in its meeting, held on May 05, 2020 approved the financial statements of the Bank for the quarter ended on March 31, 2020.

    The meeting was presided by Riyadh S.A. A. Edrees – Chairman of the Board; Faisal A. A. A. Al – Nassar – Vice Chairman of the Board was also present.

    The bank maintained its deposit base at Rs 928 billion with market share of more than 6 percent in the banking industry. Meezan Bank is the 6th largest bank in Pakistan with a network of 774 branches in 231 cities, complimented with a comprehensive array of digital services, including Internet Banking, Mobile App and other Alternate Distribution Channels for delivery of seamless Shariah-compliant banking services to its customers across Pakistan and around the globe.

    The bank’s net spread grew by 66 percent primarily due to higher volume of average earning assets and higher underlying Policy Rate while the Bank’s non-funded income grew by 64 percent mainly due to higher foreign exchange income and gain on sale of securities of Rs 680 million.

    Administrative and other operating expenses increased to Rs 7.1 billion from Rs 5.5 billion in corresponding period last year primarily due to costs associated with opening of 98 new branches since March 2019.

    The bank’s financing portfolio decreased slightly from December 2019 mainly due to overall slowdown in economic activity and repayment of seasonal financing. Recognizing stresses in certain sectors of the economy due to the COVID -19 outbreak, an additional General Provision of Rs 1 billion was approved by the Board against any potential non-performing financings, bringing the Bank’s non-performing financings coverage ratio to 147 percent – the highest in the banking industry while its infection ratio, at less than 2 percent is one of the lowest in the industry.

    The bank has taken several initiatives to safeguard the health of its employees, their families and its customers during the current pandemic, including activation of Business Continuity Plans, deployment of almost 70 percent Head Office staff to work from alternate sites or from the safety of their homes and mandatory use of face masks at all times in all its premises so as to minimize the risk of exposure to the disease.