Author: Mrs. Anjum Shahnawaz

Tax Amendment Ordinance: 14-year jail, penalty of ten time of value for currency smuggling

ISLAMABAD: The government has introduced very harsh penalties for offence of currency smuggling. The government enhanced the jail term to 14 years for currency smuggling above $200,000 besides ten time of value of the currency would be recovered as penalty.

Federal Board of Revenue (FBR) on Wednesday issued ‘Tax Laws (Second Amendment) Ordinance, 2019’ have been promulgated through the presidential order.

The following are the penal action for offences/smuggling introduced through the ordinance by amending Customs Act, 1969:

(a) If the amount of the currency over and above the permissible limit is up to $10,000 or equivalent in value (currency of other denomination) etc.

Such currency shall be liable to confiscation and any person concerned in the offence shall be liable to a penalty not exceeding the value of the excess amount of the currency.

(b) If the amount of the currency over and above the permissible limit is up to $10,001 to $20,000 or equivalent in value (currency of other denomination) etc.

Such currency shall be liable to confiscation and any person concerned in the offence shall be liable to a penalty not exceeding two times the value of the excess amount of the currency.

(c) If the amount of the currency over and above the permissible limit is $20,001 to $50,000 or equivalent in value (currency of other denomination) etc.

Such currency shall be liable to confiscation and any person concerned in the offence shall be liable to a penalty not exceeding three times the value of the currency; and upon conviction by a Special Judge he shall further be liable to imprisonment for a term not exceeding two years.

(d) If the amount of the currency over and above the permissible limit is $50,001 to $100,000 or equivalent in value (currency of other denomination) etc.

Such currency shall be liable to confiscation and any person concerned in the offence shall be liable to a penalty not exceeding four times the value of the currency; and upon conviction by a Special Judge he shall further be liable to imprisonment for a term not exceeding seven years.

(e) If the amount of the currency over and above the permissible limit is $100,001 to $200,000 or equivalent in value (currency of other denomination) etc.

Such currency shall be liable to confiscation and any person concerned in the offence shall be liable to a penalty not exceeding five times the value of the currency; and upon conviction by a Special Judge he shall further be liable to imprisonment for a term not exceeding ten years. Provided further that the sentence of the imprisonment shall not be less than three years.

(f) If the amount of the currency over and above the permissible limit exceeds $200,000 or equivalent in value (currency of other denomination) etc.

Such currency shall be liable to confiscation and any person concerned in the offence shall be liable to a penalty not exceeding ten times the value of the currency; and upon conviction by a Special Judge he shall further be liable to imprisonment for a term not exceeding fourteen years. Provided further that the sentence of the imprisonment shall not be less than five years.

January 1, 2020
Mini-budget implemented through presidential ordinance

ISLAMABAD: The government on Wednesday implemented a mini budget through a presidential ordinance making amendments to all duty and tax statutes.

The amendments to tax laws namely ‘Tax Laws (Second Amendment) Ordinance, 2019’ have been promulgated through the presidential order.

The consultants at Tax Excellence called it mini-budget and highlighted major changes made to Income Tax Ordinance, 2001, Sales Tax Act, 1990, Customs Act, 1969 and Federal Excise Act, 2005.

Now, the Tax Laws (Second) Amendment Ordinance, 2019 has been promulgated on December 26, 2019, which will remain valid for four months, unless extended or approved by the National Assembly.

The ordinance contains several amendments following Sections:

Sales Tax Act, 1990

Section 2(12A): Greenfield Industry

Section 2(43A): Tier-1 Retailer

Section 33: Offences and penalties

Section 40D: Provisions relating to goods supplied from tax-exempt areas

Section 73: Certain transactions not admissible

Section 76: Fee and service charges

Sixth Schedule: Table-1 (Imports or Supplies) [Exempt Supplies]

Eighth Schedule: Table-1 [Reduced Rate]

Ninth Schedule: Special provisions relating to traders [major change for traders]

Tenth Schedule: Rule for persons not appearing in Active Taxpayers list

12TH Schedule: Value-Addition Tax [major procedural changes]

Income Tax Ordinance, 2001

Section 2(27A): greenfield industrial undertaking [definition inserted-major impact & applicable from 1.7.19]

Section 130: Appellate Tribunal [major change]

Section 152: Payments to non-residents [major change]

Section 181D: Business licence scheme. [major change]

Section 214E: Closure of audit. [major change]

Section 216: Disclosure of information by a public servant

Section 222A: Fee and service charges

Section 230E: Directorate General of International Tax Operations [major change]

First Schedule: Part-I, II & III [major changes]

Second Schedule: Part-I, II, III & IV [major changes]

10TH Schedule: Rule 10 Clause (ba) inserted

Federal Excise Act, 2005

Section 49: Fee and service charges

Customs Act, 1969

Section 3CCA: Directorate General of Law and Prosecution” [newly inserted]

Section 6: Entrustment of functions of customs officers to certain other officers

Section 7: Assistance to the officers of customs.

Section 139: Declaration by passenger or crew of baggage

Section 156: Punishment for offences [major changes]

Section 164: Power to stop and search conveyances.

Section 169: Things seized how dealt with

Section 185A: Cognizance of offences by Special Judges

Section 194: Appellate Tribunal [section substituted]

Section 196: Reference to High Court

January 1, 2020
Law allows fuel adjustment charges only for two months

KARACHI: Industry has raised questions over decision by National Electric Power Regulatory Authority (NEPRA) to allow past four years fuel adjustment charges to K-Electric.

In a joint statement the leaders of North Karachi Association of Trade & Industry (NKATI) on Wednesday said that according to the law the distribution company not allowed to collect fuel adjustment charges for more than two months, but on the contrary, NEPRA has allowed to K-Electric for collecting four-year fuel adjustment charges which is a gross violation of the law.

They said that NEPRA’s move is a conspiracy against businesses as the products that was exported four years ago can how cover the cost of fuel adjustment now.

According to NEPRA’s notification, the amount will be charged from January 2020 to September 2020 in electricity bills.

Capt. A Moiz Khan, patron in chief, NKATI and Nasim Akhtar, president, has strongly opposed the NEPRA to receive 4-year fuel adjustment charges from industries and refused to accept this decision.

In an appeal to Arif Alvi, President of Pakistan, Imran Khan, Prime Minister, Power Minister and Chairman NEPRA, said that the permission to collect fuel adjustment charges to K Electric for the period from July 2016 to June 2019 should be canceled immediately or else industries will be destroyed.

Capt. Moiz Khan and Naseem Akhtar said that business community of Karachi are already badly affected due to high doing business cost, while electricity tariffs have also been raised, huge taxes and in the current economic situation it extremely difficult to run industries, as industrial wheel is almost jammed due to over-production costs, especially the SME sector will be ruined and even the remnants of exports will be completely closed.

They expressed concern that due to of such measures, industries will be defaulted and Government will be responsible.

Nkati’s leaders urged to President and Prime Minister to immediately cancel K Electric’s permission to collect 4-year fuel adjustment charges and measures should be taken to protect industries from destruction, otherwise the industries will be locked up, which will lead to unemployment and worsening financial crisis. It will also have a very negative impact on exports so such decisions should be avoided.

January 1, 2020
Gas shortage created purposely for using RLNG: KCCI

KARACHI: Karachi Chamber of Commerce and Industry (KCCI) has said that the gas shortage in Sindh is created purposely to force industry to take RLNG.

Agha Shahab Ahmed Khan, President KCCI in a statement on Wednesday said: “gas pressure has been reducing purposely to pressurize the industries to take RLNG, which has resulted in terribly affecting the overall production and was causing severe losses of up to billions of rupees.”

He added: “Gas resources in Sindh are largely being mismanaged that has led to creating severe crises not only in Sindh but also in Punjab and the rest of the country.

“None of the provinces were getting the required gas due to the said mismanagement. If gas resources are distributed exactly as per Article 158, there will not be any crises in Sindh and Karachi, which is the hub of economic & industrial activities while the rest of the country must get RLNG which has to be promptly imported.”

He expressed displeasure over serious gas shortage being suffered by the industries situated in all industrial zones in Karachi, stressed that the gas being produced in Sindh must at first be provided to its inhabitants and industries whereas only surplus gas should be forwarded to other provinces as per Article 158 of Pakistan’s Constitution.

Agha Shahab stated that RLNG, which was being imported to overcome gas shortages, must be provided to those provinces who either have zero gas production or were not producing sufficient amount of gas as per their requirement whereas, the Sindh province, which is blessed with abundant gas resources, must get gas from its own reserves.

“Why the consumers in Sindh are being compelled to take RLNG, when the province has sufficient gas reserves to surmount its local demand,” he asked, adding that it is totally ‘contrary to the Constitution.’

“We, the business & industrial community of Karachi, are already suffering badly because of high cost of doing business therefore the suspension of gas in Karachi would not only prove detrimental for the industry but would also lead to worsening the economic crises, besides raising poverty and unemployment,” he opined.

Referring to Prime Minister Imran Khan’s remarks in which the business community was urged to set up industries and factories as 2020 is going to be a year of growth, Agha Shahab said that under the prevailing circumstances when the existing industries were confronted with severe gas crises, high electricity rates, exorbitant interest rates, devaluing rupee against dollar, rising petroleum prices, lack of infrastructure and other serious civic issues, how could anyone think of setting up industries or go for expansion.

“In order to actually make 2020 a year of growth, the government will have to resolve all these issues on top priority otherwise there will be no growth at all and the economic performance would continue to remain depressed or it may even worsen further,” he added.

January 1, 2020
Stock market gains 665 points to start year 2020

KARACHI: The stock market gained 665 points on Wednesday to start the year 2020. The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 41,400 points as against 40,735 points showing an increase of 665 points.

Analysts at Arif Habib Limited said that the first day of 2020 started with a bang and contributed +665 points to the Index. During the session, the market went up by 809 points.

Buying activity was observed across the board especially in Banks and Cement sectors.

KEL saw highest trading volumes of 119 million shares, which was on the back of fuel adjustment recently announced by NEPRA.

Trading volumes also increased significantly over the day to 330 million shares, with the index crossing 41,500 points level. Power sector led the volumes with 121 million shares, followed by Technology (30.2 million) and Vanaspati (26.6 million). Among scrips, KEL led the table followed by UNITY (26.6 million) and FFL (17.5 million).

Sectors contributing to the performance include Banks (+277 points), Fertilizer (+93 points), E&P (+74 points), Cement (+46 points) and Inv Banks (+32 points).

Volumes increased from 177.1 million shares to 330.7 million shares (+86 percent DoD). Average traded value also increased by 14 percent to reach US$ 52.1 million as against US$ 45.7 million.

Stocks that contributed significantly to the volumes include KEL, UNITY, FFL, AVN and TRG, which formed 55 percent of total volumes.

Stocks that contributed positively include HBL (+90 points), UBL (+74 points), ENGRO (+64 points), POL (+45 points) and MCB (+36 points). Stocks that contributed negatively include PAKT (-33 points), HUBC (-9 points), SHEL (-6 points), JLICL (-3 points), and APL (-1 points).

January 1, 2020
Headline inflation increases by 12.6% in December 2019

In a concerning economic development, Pakistan’s headline inflation, as measured by the Consumer Price Index (CPI), has surged by 12.6 percent in December 2019 on a Year-on-Year (YoY) basis, according to the latest report from the Pakistan Bureau of Statistics (PBS).
(more…)

January 1, 2020
FBR drafts rules for risk based customs clearance

ISLAMABAD: Federal Board of Revenue (FBR) has drafted Risk Management System Rules for customs clearance of cargo to comply with Trade Facilitation Agreement (TFA) of World Trade Organization (WTO).
(more…)

January 1, 2020
FBR implements duty exemption/concession under 2nd Phase Pak-China FTA

ISLAMABAD: Federal Board of Revenue (FBR) on Tuesday issued concessionary rates for 6,786 tariff lines for goods imported under Second Phase of Free Trade Agreement (FTA) between Pakistan and China.

The notified rates will be effective from January 01, 2020 for next 15 years i.e. December 31, 2034.

The FBR issued SRO 1640(I)/2019 to implement the revised customs duties for goods imported from China.

The SRO said:

“S.R.O.1640(I)/2019.- In exercise of the powers conferred by section 19 of the Customs Act,1969 (IV of 1969), and in supersession of Notification No. S.R.O. 659(I)/2007,dated the 30th, June, 2007, the Federal Government is pleased to exempt, with effect from the first day of January, 2020, unless specified otherwise, the import into Pakistan from Peoples Republic of China of the goods specified in column (3) of the Table below, falling under the Heading and sub-Heading numbers of the First Schedule to the said Act as specified in column (2) of the said Table, from so much of the customs duty specified in the First Schedule as on the 1st January , 2020 to the said Act as in excess of the rates specified in columns (4), (5), (6), (7), (8), (9), (10), (11), (12), (13), (14), (15), (16), (17) or (18) of the Table with effect from the corresponding date:

“Provided that the goods are manufactured or produced and imported in conformity with the Rules of Determination of Origin of Goods and the operational certification procedures for the Rules of Origin notified by the Ministry of Commerce vide No. S.R.O. 1286(I)/ 2005, dated the 24th December, 2005 read with the Import Policy Order, 2016:-

The second phase of China-Pakistan FTA came into effect earlier this month, allowing Pakistani manufacturers and traders to export more than 300 new products to the Chinese market for zero duty charges.

The two neighboring countries have already completed all legal procedures and formalities to start implementation of the agreement.

Pakistan and China signed a protocol for implementation of the agreement during the last visit of Prime Minister Imran Khan to China.

Pakistan is already enjoying zero duty on export of 724 products to China under the first FTA signed between the two countries in 2006.

The major products on which tariff has been eliminated are textiles, garments, seafood, meat, other animal products, prepared food, leather, chemicals, plastics, oilseeds, footwear as well as engineering goods including tractors, auto parts, and home appliance machinery.

January 1, 2020
POL prices increased up to Rs3.10/liter

ISLAMABAD: The government has increased the prices of petroleum products (POL) up to Rs3.10 per liter effective from January 01, 2020.

In a notification issued on Tuesday, the government decided to increase the prices of petroleum products as per recommended by Oil and Gas Regulatory Authority (OGRA).

Following are the new POL prices:

The price of kerosene (SKO) has been increased by Rs3.10 per liter to Rs99.45 to from Rs96.35.

The price of petrol has been increased by Rs2.61 per liter to Rs116.60 from Rs113.99.

The rate of High Speed Diesel (HSD) has been increased by Rs2.25 per liter to Rs127.26 from Rs125.01.

The price of Light Diesel Oil (LDO) has been increased by Rs2.08 to Rs84.51 from Rs82.43.

January 1, 2020
FBR extends return filing date up to January 31

ISLAMABAD: Federal Board of Revenue (FBR) granted fifth extension for filing income tax return for tax year 2019 up to January 31, 2020.

The FBR issued Income Tax Circular No. 18 of 2019 for extension in date of filing income tax returns/statements for tax year 2019.

The FBR said that the date of filing of return of total income / statements of final taxation for individuals and associations of persons for the tax year 2019 which was due on September 30, 2019 and extended up to December 31, 2019 has been extended up to January 31, 2020.

The FBR further said that the date of filing of return of total income/statements of final taxation for companies for the tax year 2019, which was due on September 30, 2019 and extended up to December 31, 2019, in respect of those companies who have paid 90 percent of the admitted tax liability on or before September 30, 2019, has been allowed further extension up to January 31, 2020.

The date of filing of return of total income/statements of final taxation for companies for tax year 2019, which was due on December 31, 2019 has also been extended up to January 31, 2020.

December 31, 2019