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Author: Mrs. Anjum Shahnawaz

  • FBR proposed imposing additional sales tax on failure to implement CNIC condition

    FBR proposed imposing additional sales tax on failure to implement CNIC condition

    KARACHI: SITE Association of Industry on Monday proposed the Federal Board of Revenue (FBR) to imposed additional sales tax as the government failed to implement condition of Computerized National Identity Card (CNIC).

    Instead of disallowing proportionate input tax for sales made without CNICs, alternate is recommended for sales made without submission of CNIC to increase the further tax at 5 percent of sales till December 31, 2019, 7.5 percent of further sales till March 31, 2020 and further tax at 10 percent of sales till June 30, 2020.

    The SITE Association of Industry proposed new formula to end the deadlock between Government and traders on the condition of production of CNIC on sales and purchase of goods by the Federal Board of Revenue.

    Chairman of Taxation Committee of the Association Saud Mehmood has suggested that input tax inadmissibility against sales made without CNIC should be replaced with progressive increase in rate of further sales tax.

    He said that the FBR has not been able to successfully implement the CNIC condition due to the complex nature of disallowing input against sales made without CNIC which is difficult for sellers as well.

    Because of the complex nature of this condition, sales tax registered sellers have made CNIC submission the only option whereas legislation allows for sales without CNIC as well.

    Saud further said that in order to make implementation of CNIC submission smooth, SITE Association of Industry strongly recommends that input tax inadmissibility be replaced with progressive increase in further tax. “Progressive increase in further tax will make the transition smooth. Moreover, it will be in line with the existing system of charging further tax of 3 percent of sales made to non-filers,” he added.

    SITE Association of Industry believes in the documentation of the economy. When submission of CNIC is mandatory for availing a mobile connection then there is no reason to shy away from submitting CNIC for purchases above PKR 50,000/-.

    “We feel that more than the requirement of CNIC, the sudden imposition is one of the causes of the stiff resistance being faced by FBR. A gradual and progressive implementation of further sales tax on sales without CNIC will make the whole process more palatable.”

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  • Stock market gains 900 points on policy rate ease expectations

    Stock market gains 900 points on policy rate ease expectations

    KARACHI: The stock market gained 900 points or 2.6 percent on Monday on expectations of ease in policy rate.

    The Index closed at 35,277 points as against 34,378 points showing an increase of 900 points.

    Analysts at Arif Habib Limited said expectation of volumetric increase in Cement dispatches fueled buying activity since Wednesday, and the confirmation thereof gave confidence to the investors of their thesis.

    Cut in policy rate by SBP is also on the anvil, whereby market is keenly waiting for more cues from monthly CPI (yet to be released) and downward adjustment of NSS rates (which are linked in PIB yields, and again yet to be materialized).

    Temperature on political front also seemed to be cooling-off, giving way to the talks of NRO with jailed politicians. Overall, the situation seems ripe for the re-conversion of funds lately deployed in Fixed income back into Equities that in itself means significant jump in the index as the majority of the AUMs of the mutual fund industry went to money market funds.

    Overall, the index gained 931 points and closed the session at +900 points. The Index also crossed 35k level after 4 months.

    Major activity was seen in Cement sector with 34.6 million shares, followed by Banks (20.7 million) and Engineering (18.6 million). Among scrips, FCCL led trading volumes with 11.2 million shares, followed by HASCOL (9.4 million) and BOP (8.8 million).

    Sectors contributing to the performance include Banks (+273 points), Fertilizer (+135 points), E&P (+114 points), Cement (+90 points) and Power (+84 points).

    Volumes increased from 157.1 million shares to 207.5 million shares (+32 percent DoD). Average traded value also increased by 31 percent to reach US$ 54.3 million as against US$ 41.5 million.

    Stocks that contributed significantly to the volumes include FCCL, HASCOL, BOP, UNITY and KEL, which formed 22 percent of total volumes.

    Stocks that contributed positively include HBL (+94 points), MCB (+74 points), HUBC (+73 points), ENGRO (+58 points) and LUCK (+49 points). Stocks that contributed negatively include ANL (-2 points), APL (-1 points), SCBPL (-1 points), GHGL (-1 points), and SRVI (-1 points).

  • Rupee ends unchanged amid higher dollar demand

    Rupee ends unchanged amid higher dollar demand

    KARACHI: The Pak Rupee ended unchanged against dollar on Monday despite higher demand for import and corporate payments.

    The rupee ended Rs155.65 to the dollar, the same closing level on last Friday, in Interbank Foreign Exchange Market.

    Currency dealers said that the market was initiated with higher demand for the dollar due to two weekly holidays. However, later the rupee recovered to the previous level.

    The foreign currency market was initiated in the range of Rs155.65 and Rs155.75. The market recorded day high of Rs155.67 and low of Rs155.65 and closed at Rs155.65.

    The exchange rate in open market witnessed appreciation in rupee value. The buying and selling of dollar was recorded at Rs155.45/Rs155.65 from last Friday’s closing of Rs155.50/Rs155.80 in cash ready market.

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  • Cement factory shuts down on financial challenges

    Cement factory shuts down on financial challenges

    KARACHI: A cement factory has been closed down completely owing to financial difficulties making, according to a notices send to Pakistan Stock Exchange (PSX) on Monday.

    The board of directors of directors (BoD) of Dandot Cement Company Limited in its resolution on October 30, 2019 decided to close down the factory completely while complying with all relevant laws in respect.

    The company in its communication said that the company had been facing serious challenges with respect to viable operations, adequate liquidity and had incurred huge financial losses for the last many years.

    “Further, the current operations of the existing plant are unable to meet the prescribed environmental standards as stipulated by the law.”

    Hence, a large amount of fresh capital needs to be invested for a comprehensive Balancing, Modernization and Replacement (BMR) of the project to achieve environment standards, energy efficiency with cost effectiveness and convert the process into automated to made the company financially viable and legally compliant.

    It said that the company had no finance of its own and needed to raise fresh capital to invest in the BMR project.

    After the relevant finances have been arranged, the project execution will also take more than 12 months, as the current plant needs to be dismantled before new equipment can be installed therein.

    This entire process will take an indefinite period of time to complete before operation can resume.

  • Immovable property registrar requires to provide buyers, sellers information

    Immovable property registrar requires to provide buyers, sellers information

    KARACHI: A registrar is required to provide information of buyers and sellers of immovable property in withholding tax statement to the Federal Board of Revenue (FBR).

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  • Proposals for establishment of Pakistan Revenue Authority to be finalized by June 2020

    Proposals for establishment of Pakistan Revenue Authority to be finalized by June 2020

    ISLAMABAD: The ministry of finance has been directed to finalize proposals for establishment of Pakistan Revenue Authority (PRA) by June 30, 2020.

    The directives have been issued at a meeting chaired by the prime minister on restructuring of FBR held last month.

    It is decided that the ministry of finance (Revenue Division) to formulate comprehensive proposals for establishment of PRA and centralized collection of General Sales Tax (Goods and Services) by PRA under the ambit of World Bank’s “Pakistan Raises Revenue Project” by June 30, 2020.

    The meeting discussed the current structure of the FBR that it is archaic and highly bureaucratic, which does not commensurate with technology driven tax administration in vogue around the world.

    There is need to establish legislative empowered, tailored to task (lean organization) and technology driven PRA.

    In the interim period, the FBR headquarters needs to be reorganized /articulated on functional lines segregating Inland Revenue and Customs Operations into North and South Zones.

    Deputy Chairman (2) of FBR need to be appointed to effectively coordinate and supervise segregated functions of Inland Revenue and Customs.

    The meeting approved to appoint deputy chairmen for Inland Revenue and Customs by November 30, 2019.

    Following is the proposed mandate to PRA:

    • Constitutionally empowered and autonomous authority with ‘lean organization’, structured along functional lines.
    • Tax policy entrusted to Ministry of Finance (Revenue Division); guided by political leadership and informed by Tax Policy Board and PRA Board.
    • Disparate provincial revenue authorities should be consolidated into a single authority for each province under the overall coordinated, facilitation, guidance and oversight by PRA (through integrated process).
    • Establishment of Directorate General of Revenue Coordination & Oversight (headed by Director General –Grade 21) at PRA for ensuring fiscal discipline, enhance flexibility and responsiveness of fiscal framework.
    • To address collection, jurisdiction and double taxation issues, GST (including services) be adopted as PRA’s responsibility.
    • Conditional vertical resource distribution formula linked to revenue collection performance under PRA’s coordination / oversight.

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  • FBR to get real-time data of financial transactions

    FBR to get real-time data of financial transactions

    ISLAMABAD: Federal Board of Revenue (FBR) will get real-time data of financial transactions of the banking system by end of this year.

    According to the minutes of the meeting chaired by the prime minister last month, it is decided that Ministry of Law and Justice in consultation with State Bank of Pakistan (SBP) to propose necessary amendments in banking laws/ regulations for ensuring real-time data sharing of financial transactions with the Federal Board of Revenue (FBR).

    The law division and SBP have been tasked to finalize the proposal by December 31, 2019.

    The meeting considered the adoption of Computerized National Identity Card (CNIC) as common identifier.

    The meeting discussed that data consolidation and documentation of economy is a key responsibility of all public and private sector organizations such as financial institutions, utility companies etc.

    CNIC, as common identifier needs to be adopted by all public and private sector entities for documentation of economy and real time sharing of transactions data with the FBR.

    In the same context commercial utility connections have still not been brought into the tax net with rampant tax evasion in vogue.

    The meeting decided that CNIC would be adopted as common identifier by June 30, 2020 akin to social security number in western countries for all business transactions.

    It is also decided that the Ministry of Law and Justice in consultation with SBP to propose necessary amendments in Banking Laws / Regulations for ensuring real-time data sharing of financial transactions with the FBR.

    The meeting decided that by November 30, 2019 the commercial electricity and gas connections must be brought into the tax net immediately.

    The FBR has been given task to bring all commercial electricity and gas connections into the tax net.

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  • FBR to initiate criminal proceedings in tax evasion above Rs10 million

    FBR to initiate criminal proceedings in tax evasion above Rs10 million

    ISLAMABAD: Federal Board of Revenue (FBR) will initiate criminal proceedings in those cases where tax evasion above Rs10 million is detected.

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  • Implementing full-fledged VAT regime in next two to four years decided

    Implementing full-fledged VAT regime in next two to four years decided

    ISLAMABAD: The government has decided to implement full-fledged Value Added Tax (VAT) by eliminating General Sales Tax (GST) in next two to four years.

    This has been decided at a meeting under the chairmanship of the prime minister held last month.

    According to the minutes of the meeting, it was considered that VAT regime instead of GST needs to be gradually implemented within 2-4 years to enhance revenues, broaden tax base and assist in documentation of economy.

    It is decided that the Federal Board of Revenue (FBR) will fully implement VAT regime for all business segments over next 2-4 years.

    According to the roadmap for VAT implementation, the mechanism would be:

    — Member Inland Revenue (Operations); focal steward for implementation of VAT Regime over next 2-4 years.

    — Director General Input – Output Coefficient Organization (IOCO – IR) should be redesignated as DG IOCO & VAT Compliance – Functional lead for VAT Implementation.

    — Commissioner Broadening of Tax Base (BTB) at each Regional Tax Office (RTO)/ Large Taxpayer Unit (LTU) would be responsible for business level implementation – Assistant Commissioner of respective RTO/LTU for Value Chain Evaluation and VAT Implementation.

    — VAT would be progressively implemented across various segments commencing with 3rd Schedule products and gradually absorbing complex value chain products.

    The meeting considered the implementation of VAT and decided enactment of VAT related legislation, rules and regulation if required.

    For the purpose capacity building of FBR for absorption of VAT Regime would be undertaken.

    It is also decided that time and resources for VAT assessment surveys of particular industrial/business segment. In order to implement the scheme successfully, the revenue potential of particular industrial segments would be assessed.

  • FBR to conduct nation-wide survey of immovable properties to assess wealth parked in real estate sector

    FBR to conduct nation-wide survey of immovable properties to assess wealth parked in real estate sector

    ISLAMABAD: Federal Board of Revenue (FBR) will conduct nation-wide survey of immovable properties to assess and tap colossal wealth parked in the real estate sector.

    The decision has been taken and approved at a meeting under the chairmanship of the prime minister held last month.

    According to minutes of the meeting it has been decided to conduct nation-wide survey of immovable property to assess and tap colossal wealth parked in the real-estate sector.

    The survey would be conducted along with geo-tagging within next two years.

    It has been considered that Chinese proposal for conducting digitized land survey (digital cartography) of entire country is pending for the last two years.

    Proposal for proof of concept of digital survey of Islamabad industrial area (1-9) along with geo-tagging option is already under consideration with FBR.

    Proposal of digital nation-wide survey has been approved in principal. Further the digital survey of Islamabad Industrial Area (1-9) with geo-tagging would be undertaken at priority.

    It is also decided that nation-wide survey would be undertaken and completed over the next two years while taking Chinese proposal in consideration.

    The meeting also considered proposal of nation-wide tax assessment and documentation drive to effectively check tax evasion and ensure documentation of economy.

    The documentation drive needs to be undertaken over the next two to three years. The documentation drive will assist in ascertaining untapped segments including businesses, real-estate and industries.

    Therefore, it is decided that a comprehensive proposal for nation-wide tax assessment and documentation drive (undertaken over two years) would be formulated.

    It is also decided that tax reforms must not create choking effect for the economy. And correct taxation measures would be taken with prompt implementation instead of entanglement in extended impasses.

    The meeting discussed the actualization of tax advisory board to alleviate trust deficit, preparation of objective tax policies and improve taxpayers’ awareness.

    The tax advisory board (as amended in FBR Act, 2007) needs to be actualized at the ministry of finance (Revenue Division) as formal feedback mechanism for policy level advice on taxation issues.

    This will effectively separate tax policy and tax administration functions whereby FBR to act as revenue collection agency only.

    In this regard, it is decided that tax advisory board should be actualized immediately to discuss threadbare all taxation policies relieving FBR from additional burden of tax policy formulation.