Author: Mrs. Anjum Shahnawaz

No tax on cash withdrawal from banks on active taxpayers: FBR

ISLAMABAD: Federal Board of Revenue (FBR) on Tuesday said that there is no tax on cash withdrawal from banks for those whose names are on the Active Taxpayers List (ATL).

Otherwise, the withholding tax rate on cash withdrawal is 0.6 percent for persons not appearing on the ATL.

In order to ensure names on ATL, taxpayers are required to file their annual income tax returns. The FBR urged the taxpayers to avail the extended the last date for filing income tax returns for tax year 2019, which is December 31, 2019.

The FBR said that in case of enlistment in the ATL, the taxpayers shall have following benefits:

— Almost half of the withholding tax as compared with the inactive taxpayers

— 5.5 percent tax on imports (raw material)

— 6 percent tax on imports (commercial)

— 15 percent tax on dividends

— 10 percent tax on bank and savings scheme profit worth up to Rs0.5 million and 15 percent on above Rs0.5 million

— 4.5 percent tax on sale of goods by persons except companies

— 10 percent tax on provision of services by persons except companies

— 7.5 percent tax on contract executed by person except companies

— 15 percent tax on prize bonds money of prize bonds

— 12 percent tax on commission

— Annual token fee of vehicles from Rs800 to Rs10,000

— Withholding tax on vehicle registration from Rs7,500 to Rs250,000

— No tax on cash withdrawal of more than Rs50,000 from banks

— No tax on bank transactions (cross cheque, pay order, demand draft etc.)

— One percent tax on purchase of property

— 10 percent tax on sale by auction

— Tax on mobile phone import from Rs70 to Rs200

— 10 percent tax deduction for payment against advertisement to non-resident person

The FBR said that in case of no enlistment in the ATL, the following tax rates are applicable:

— Almost double tax rates

— 11 percent tax on imports (raw material)

— 12 percent tax on imports (commercial)

— 30 percent tax on dividends

— 20 percent tax on bank and savings scheme profit worth up to Rs0.5 million and 30 percent on above Rs0.5 million

— 9 percent tax on sale of goods by persons except companies

— 20 percent tax on provision of services by person except companies

— 15 percent tax on contract executed by person except companies

— 30 percent tax on prize money of prize bonds

— 24 percent tax on commission

— Annual token fee of vehicles from Rs1,600 to Rs20,000

— Withholding tax on vehicle registration from Rs15,000 to Rs500,000

— 0.6 percent tax on cash withdrawal of more than Rs50,000 from banks

— 0.6 percent tax on bank transactions (cross cheque, pay order, demand draft etc.)

— 2 percent tax on purchase of property

— 20 percent tax on sale by auction

— Tax on mobile phone import from Rs140 to Rs400

— 20 percent tax deduction for payment against advertisement to non-resident person

The FBR said that those persons failed to file their return then the tax authorities would assess the applicable tax without serving any notice. Further, legal action will be taken resulting into imprisonment of one to three years.

The FBR also said that late income tax return filers will pay fine.

The FBR said that the filing of income tax returns is mandatory for all persons with annual income of Rs400,000 or more.

December 24, 2019
FBR needs to collect Rs2,198 billion in first half of current fiscal year

KARACHI: Federal Board of Revenue (FBR) is required to collect Rs2,198 billion during first half of the current fiscal year as per revised performance criteria of International Monetary Fund (IMF).

The revenue collecting agency has failed to achieve the first quarter performance criteria.

According to Country Report Pakistan released by IMF on Monday the actual performance criteria for revenue collection was Rs2,367 billion during first half (July – December) of current fiscal year, which has been revised downward by Rs169 billion to Rs2,198 billion.

This shows that the FBR will need to collect Rs590 billion in the month of December 2019 to achieve the revised performance criteria.

The FBR’s provisional collection during first five months (July – November) 2019/2020 was Rs1,608 billion.

As per IMF documents the FBR failed to achieve the first quarter (July – September) 2019/2020 target of Rs1,071 billion and its collection was at Rs964 billion.

The actual revenue collection target for current fiscal year was Rs5,550 billion. However, the indicative target as per IMF documents has also been revised downward to Rs5,238 billion.

The FBR has to raise revenue collection to Rs3,520 billion by March 2020 in order to ensure the desired target for current fiscal year.

As per IMF documents: “Tax revenue is now expected to be 0.5 percent of GDP lower than originally expected: while domestic collection is envisaged to remain strong, growing by over 25 percent y-o-y over FY 2020, growth in trade-related tax revenues is expected to remain subdued as declining imports continue to weigh on collections—more than 40 percent of total tax revenue in Pakistan is collected at the import stage.”

The FBR has been given revised Indicative Targets for end December 2019 including net tax collection to recognize the faster than expected external adjustment negatively impacting customs revenue, besides net accumulation of tax refund arrears to capture the authorities plan to reflect the end-June stock of tax refund arrears.

December 24, 2019
Tax return filing hits new record at 2.73 million

KARACHI: The income tax return filing touches to a new record high of 2.73 million as people making compliance to avoid 100 percent additional tax on persons not appearing on Active Taxpayers List (ATL).

The income tax return filing increased to 2.73 million on the basis of returns filed till December 22, 2019 for tax year 2018.

Sources in Federal Board of Revenue (FBR) attributed the record increase in return filing to the amendment to Income Tax Ordinance, 2001 through Finance Act, 2019.

In the last budget 2019/2020 a new Tenth Schedule was inserted to Income Tax Ordinance, 2001 under which persons not appearing on ATL would liable to pay 100 percent more withholding tax on certain transactions.

The ATL for tax year 2018 issued on March 01, 2019 in which 1.59 million names were appeared of those taxpayer, who filed their returns by due date.

However, later the FBR granted extension in date for filing returns due to introduction of a tax amnesty scheme.

The extension for filing income tax returns for tax year 2018 was granted up to August 09, 2019.

The return filing up to August 09, 2019 for tax year 2018 jumped up to 2.5 million from 1.59 million returns, which were part of the first ATL issued March 01, 2019.

The insertion of Tenth Schedule to Income Tax Ordinance, 2001 speed up the return filing by taxpayers in order to avoid higher tax rate on certain transactions.

Previously, people filing their annual income tax returns after due date were not allowed to appear on the ATL. However, another provision was added to the main statute under which persons by paying penalty can include their name to ATL.

Therefore, since August 09, 2019 the FBR received around 230,000 tax returns for tax year 2018 till December 22, 2019.

The FBR will issue ATL for tax year 2019 on March 01, 2020 and till then the prevailing ATL will be applicable for the purpose of withholding tax rates on certain transactions.

December 24, 2019
Corporate RTO Chief urges business community to play role for tax policy improvement

KARACHI: Dr. Aftab Imam, Chief Commissioner, Corporate Regional Tax Office (CRTO) Karachi has urged business community to play their role in improvement of tax policy and procedures.
(more…)

December 23, 2019
Rupee ends flat amid import, corporate payment demand

KARACHI: The Pak Rupee ended flat against dollar on Monday despite demand for import and corporate payments, dealers said.

The rupee closed at Rs154.91 to the dollar from last Friday’s closing of Rs154.90 in interbank foreign exchange market.

The currency dealers said that the due to first trading day after two weekly holidays the local currency was under pressure. In the first half of trading day the demand for the greenback was high. However, inflows of export receipts and workers’ remittances helped the rupee to stable against the foreign currency.

The exchange rate in open market witnessed depreciation in rupee value. The buying and selling of the dollar was recorded at Rs154.70/Rs155.00 from last Friday’s closing of Rs154.40/Rs154.70 in cash ready market.

December 23, 2019
SBP includes Japanese Yen to Asian clearing union mechanism

KARACHI: State Bank of Pakistan (SBP) on Monday announced to include Japanese Yen to Asian Clearing Union (ACU) mechanism.

A statement issued by the central bank said that it had been decided to include ACU Japanese Yen as the third ACU currency along with USD & EURO with effect from January 01, 2020.

The ACU Yen would be equivalent in value to one Yen. Accordingly, transactions under ACU Mechanism, in addition to ACU Dollar (ACUD) & ACU Euro (ACUE), may also be denominated and settled in ACU Yen (ACUY) from January 01, 2020.

In this regard, ADs may establish ACUY accounts with their correspondents in ACU member countries and open their correspondents’ ACUY accounts with them.

The transactions in ACUY would be reported by ADs to SBP and settled by SBP separately likewise in other two ACU currencies.

Accordingly, three separate accounts will be maintained for the settlement of each ACU currency (ACU Dollar, ACU Euro and ACU Yen).

Further, with a view to encourage ADs to maintain reasonable / sufficient balances in their accounts to ensure timely payments, the authorized dealers are permitted to pay / receive interest, at their discretion, on these (ACUD, ACUE & ACUY) accounts as per mutually agreed terms and conditions.

The balances of ACUD, ACUE & ACUY accounts together with other FCY / Nostro accounts would however be subject to the overall exposure limits of ADs.

December 23, 2019
Equity market falls by 825 points on profit taking

KARACHI: The equity market fell by 825 points on Monday owing to profit taking in the last days of present year.

The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 40,008 points as against 40,833 points showing a decline of 825 points.

Analysts at Arif Habib Limited said that the market took a significant toll from the internal and external headwinds faced these days.

During MoC, index decline crossed -900 points, which built up throughout the day.

Market closed -825 points and closed the session with 274 stocks in decline. Selling was observed across the board, but was particularly seen in oil & gas chain.

PPL’s most anticipated discovery proved to be a miniscule one that dampened the investor sentiment.

Resultantly, PPL traded near lower circuits by the end of session. Cement sector led the volumes with 26.6 million shares, followed by Technology (23.1 million) and O&GMCs (22.7 million). Among scrips, WTL traded the most with 13.6 million shares, followed by HASCOLR (12.7 million) and UNITY (11.9 million).

Sectors contributing to the performance include Banks (-225 points), E&P (-174 points), Power (-71 points), Fertilizer (-66 points) and Inv Banks (-56 points).

Volumes declined from 180.7 million shares to 179.1 million shares (-1 percent DoD). Average traded value however, declined by 19 percent to reach US$ 44.9 million as against US$ 55.1 million.

Stocks that contributed significantly to the volumes include WTL, HASCOLR1, UNITY, FFL and FCCL, which formed 31 percent of total volumes.

Stocks that contributed positively include NESTLE (+9 points), INDU (+5 points), DGKC (+3 points), GHGL (+1 points) and INIL (+0 points). Stocks that contributed negatively include HBL (-93 points), PPL (-91 points), HUBC (-54 points), DAWH (-51 points), and OGDC (-49 points).

December 23, 2019
PPL announces major discoveries of hydrocarbons in Sindh, Balochistan

KARACHI: Pakistan Petroleum Limited (PPL) has announced major discoveries of hydrocarbons in Sindh and Blochistan, according to notifications received by Pakistan Stock Exchange (PSX) on Monday.

In the first notice, the PPL disclosed a hydrocarbon discovery in exploratory well, Bitro-I in Latif Block located in Kharipur District, Sindh, by the joint venture partners of the Latif Exploratory License, namely the company which holds a 33.30 percent working interest there in, ENI Pakistan (M) Limited which holds a 33.30 percent working interest there in, and United Energy Pakistan Limited, which holds a 33.40 percent working interest there in and is also the operator of the Block.

The PPL said that the well was spud on October 6, 2019 to test the hydrocarbon potential of B and Intra B sands of the Lower Goru Formation, as primary and secondary objectives, respectively. The well was successfully drilled to a depth of 11,854 ft. Based on the wireline logs and the drilling results, a Modular Dynamics Testing was done against the promising zone in the B and Intra B sands.

Upon the completion of the well, B sand zone was perforated, which flowed 28.6 million standard cubic feet per day of gas with 152 barrels per day (condensed) water at a flowing well head pressure of 3,116 pounds per square inch at 44/64” choke size.

In another notice, the PPLC disclosed that the company had made a hydrocarbon discovery in the first exploratory well, Margand X-I in Margand Block, Blochistan, that is operated by the company which holds 100 percent working interest there in.

The well was spud on June 30, 2019 to a measured dept of 4,500 meters inside Chiltan Limestone. Based on the wireline logs, Modular Dynamics Testing was done which proved the presence of hydrocarbons.

Accordingly, a Drill Stem Test was done in the Chiltan Limestone, during which the well flowed a maximum 10.7 million cubic feet per day of gas at 64/64 inches choke size at a flowing well head pressure of around 516 pounds per square inch with 132 barrels per day liquid. The nature of the liquid is being investigated. However, the well has the potential to flow at higher rates after an acid stimulation job.

The company said that it was the first gas discovery in the Kalat Plateau and it had opened a new sub-basin for further hydrocarbon exploration.

The discovery is the result of Company’s aggressive strategy of exploration of the frontier basins in order to open new avenues for hydrocarbons exploration and production in the province of Balochistan.

The discovery will add to the company’s hydrocarbon reserves and will contribute in reducing the gap between the supply and demand of oil and gas in the country through exploitation of indigenous resources.

December 23, 2019
Bank holiday

KARACHI: The State Bank of Pakistan (SBP) on Monday said that the central bank will remain closed on December 25, 2019 (Wednesday) on the occasion of Qauid-e-Azam Day and Christmas.

In a circular issued to all the presidents and chief executives of banks, development finance institutions and microfinance banks, the central bank said that it will remained closed on December 25, 2019 (Wednesday) on the occasion of Qauid-e-Azam Day and Christmas, as declared by the government of Pakistan.

December 23, 2019
Investors of saving schemes to explain source of income

ISLAMABAD: Investors of National Saving Schemes (NSS) will explain source of income for their existing investments under ongoing drive of the government to check money laundering and terror financing.

The ministry of finance last week issued draft National Savings Schemes (AML and CFT) Rules, 2019 to document the investment and identify links of investments to Money Laundering and Terror Financing.

Under the rules the Central Directorate of National Savings (CDNS) will conduct customers due diligence (CDD) of all existing and new investors of NSS.

The customers will require to provide source of earnings for the investment and their annual income.

Currently CSNS has 4 million customers and the total investment has increased to around Rs4 trillion by October 2019.

According to the draft rules: Every customer, whether permanent or occasional and whether natural or legal person or legal arrangement, shall be identified for establishing business relationship and for the purpose following information shall be obtained, verified using reliable, independent source documents, data or information and recorded namely: –

(a) full name as per identity or registration documents;

(b) national identity card, passport, national identity card for overseas pakistanis, Pakistan origin card or alien registration card number, etc.

(c) registration or incorporation number of business, if applicable;

(d) residential address, telephone numbers and e-mail, if available;

(e) business address, telephone numbers and e-mail, if available;

(f) date of birth;

(g) date and place of registration or incorporation of business, if applicable;

(h) nationality

(i) place of birth;

(j) national tax number (NTN), if applicable;

(k) nature of business and location, if applicable;

(l) sources of earnings;

(m) customer’s net worth in respect of legal persons, legal arrangements and high risk customers; and

(n) annual income.

December 23, 2019