Pkrevenue.com

Author: Mrs. Anjum Shahnawaz

  • FPCCI urges government to resolve issues of small traders

    FPCCI urges government to resolve issues of small traders

    KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) on Monday urged the government resolves problems of small traders in order to keep the economy move forward.

    Engr. Daroo Khan Achackzai, President FPCCI, S.M. Muneer, Iftikhar Ali Malik, Former Presidents, Senior Vice President and Vice Presidents, Mian Zafar of Faisalabad Small Traders Chamber, Dr. Noman Idrees Butt and Business Community of Pakistan strongly support new government initiative to efforts to document the economy and expanding tax net that will definitely boost socio-economic development and economic prosperity of the people of Pakistan.

    The FPCCI always proactively engage with the government to bring foreign exchange through positive image of Pakistan and assures its support to help government on all economic fronts.

    The business community while appreciating the Prime Minister endeavor to re-track economy of the Pakistan has also requested that being the policy of the PM to solve all issues with consultation and concentration by involving real stakeholder to invite businessmen especially small traders who are suffering seriously due to some measures announced in the federal budget.

    Being the national institute of private sector the President FPCCI showed his serious concern on the problems of small traders and requests the prime minister to give us time and appointment to solve the latest burning issues on priority to keep the economy moving forward.

  • KCCI supports government resolve to tax all taxable incomes

    KCCI supports government resolve to tax all taxable incomes

    KARACHI: Karachi Chamber of Commerce and Industry (KCCI) has supported efforts of the government to bring all taxable income into tax net.

    In a statement issued on Monday President KCCI Junaid Esmail Makda said that Karachi Chamber never supported any strikes and will continue to do so in future as well because strikes were neither in favor of the business community nor in favor of the government therefore, they strongly believe in negotiations which was also suggested by Chairman BMG during the abovementioned meeting with PM Imran Khan.

    He opined that the government has set an ambitious revenue collection target and we hope that the government could come close to achieving it as the country is in dire need of it.

    Junaid Makda stated that the government rightly emphasizes on strictly dealing with tax evaders particularly those who have been living lavish lives, frequently travelling abroad, having huge properties and extravagant vehicles while their kids were also studying in foreign universities but during this course of action no injustice be done to any innocent.

    “Our Prime Minister, State Minister, PM’s Advisor, Chairman FBR and other lawmakers have been claiming of possessing details of all such tax evaders and assuring to take strict action but I would like to suggest that the names of such elements who are the actual culprits must be publicized in the media. It is genuinely because of such elements that the loyal taxpayers have to bear the burden of exorbitant taxes which is a sheer injustice and needs special attention,” he added.

    While appreciating PM’s remarks pertaining to partnering with the business community in order to resolve issues and ensuring Ease of Doing Business which is the need of the hour, Junaid Makda requested a flexible approach while dealing with loyal taxpayers who hardly receive just 5 percent of facilities as compared to their contribution to the national exchequer.

    He further pointed out that hundreds of imported containers remain stuck up at the port either due to anomalies or any other issues emerging after the amendments. Although the Chairman FBR Shabbar Zaidi has assured to look into this matter but the business community would highly appreciate a more rapid approach with permanent solution to this issue in order to save businessmen from suffering serious losses on account of demurrage and detention charges.

    Chairman Businessmen Group (BMG) & Former President KCCI Siraj Kassam Teli and President Karachi Chamber of Commerce & Industry (KCCI) Junaid Esmail Makda, welcomed the assurance given by Prime Minister Imran Khan during his last meeting with Karachi’s business community, stated that the Karachi Chamber fully supports the government’s resolve to bring everyone into the tax net as higher number of taxpayers would result in dividing the tax burden and ultimately ensure relief to existing taxpayers who are currently overburdened with exorbitant taxes and duties.

    Chairman BMG and President KCCI categorically stated that Karachi Chamber’s membership base comprises of taxpayers only who all have valid NTN numbers. “KCCI firmly believes that everyone should pay taxes and it was a matter of pride for us that we represent a city that contributes a mammoth amount of more than 70 percent revenue to the national exchequer in shape of taxes, duties and other levies”, they said, adding that everyone should be taxed and no tax exemptions should be granted to favorites as it is the prime responsibility of every citizen to contribute towards the progress and prosperity of Pakistan by paying all the applicable taxes.

    The KCCI leadership further urged the FBR to post the city-wise taxation details and relevant statistical data on its website so that actual position could be brought into the limelight and other cities, which were contributing less taxes, must also be taken to task.

    Chairman BMG Siraj Kassam Teli commented that the government has devised numerous laws and amendments with a sincere intent to enhance tax collection but we fear that most of these laws and amendments which have enhanced discretionary powers to FBR officials even at lower level would only be used to harass the taxpayers in order to seek personal benefits and gratifications.

    “The government is serious towards improving the tax collection which we highly appreciate but the recently introduced laws and amendments need some review and scrutiny by independent individuals. These laws should be devised and implemented in such a manner that they don’t pave way for corruption but actually enhance the revenue”, he added.

    He was of the opinion that in order to achieve the desired results in terms of revenue collection, the government has simultaneously opened many fronts which have terribly disturbed the entire business cycle and it was the basic reason behind why they (the government) have been facing agitations and resistance.

    “It is requested to compare all the segments where taxes have been imposed verses the revenue expected and decide whether it is worth to take on that particular segment immediately or leave it for a while. We are not asking to leave anybody out of the net but wherever the implementation is not immediately possible it’s better to give some time and let the country move forward, he added.

  • Foreign direct investment falls by 50 percent in 2018/2019

    Foreign direct investment falls by 50 percent in 2018/2019

    KARACHI: The inflow of foreign direct investment (FDI) to the country has declined by 50 percent to $1.73 billion during fiscal year 2018/2019 as compared with $3.47 billion in the preceding fiscal year, State Bank of Pakistan (SBP) said on Monday.

    The inflows under FDI recorded growth of 24.5 percent to $3.16 billion during last fiscal year as compared with $4.185 billion in the fiscal year 2017/2018. On the other hand the outflows recorded 99 percent increase to $1.422 billion during fiscal year 2018/2019 as compared with $714.2 million in the preceding fiscal year.

    The total foreign private investment into the country fell by 59.10 percent to $1.32 billion in the last fiscal year as compared with $3.23 billion in the preceding fiscal year.

    The inflows of portfolio investment into the capital market were declined by 72.5 percent during the fiscal year under review. The market witnessed outflows of $415.2 million during the last fiscal year as compared with the outflows of $240.7 million in the preceding fiscal year.

    The total foreign investment including foreign public investment fell by 94.2 percent to $330 million in 2018/2019 as compared with $5.68 billion in the preceding fiscal year.

  • Stock market plunges on policy rate uncertainty

    Stock market plunges on policy rate uncertainty

    KARACHI: The stock market plunged by 714 points on Monday owing to uncertainty on monetary policy that is scheduled to be announced tomorrow.

    The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 32,958 points as against 33,672 points showing a decline of 714 points.

    Analysts at Arif Habib Limited said that the market witnessed a significant decline of around 750 points during the session that is caused by uncertainty on monetary policy.

    As per revised schedule, SBP is set to announce monetary policy tomorrow, where consensus estimate is for a hike of 100 basis points.

    An interest rate hike in line with expectation will increase the policy rate to 13.25 percent.

    Slowdown in economy amid recent protest of traders has caused negative sentiment amongst investors.

    Major volumes were observed in Cement Sector to the tune of 11.5 million shares, followed by Banks (7.5 million) and Technology (7.2 million) Sectors. MLCF topped the chart with 5.5 million, followed by TRG (5.3 million) and KEL (3.2 million).

    Sectors contributing to the performance include Fertilizer (-135 points), E&P (-115 points), Banks (-83 points), Power (-72 points), O&GMCs (-67 points).

    Volumes increased by from 55.5 million shares to 69 million shares (+24 percent DoD). Average traded value increased by merely 3 percent to reach US$ 14.7 million as against US$ 14.3 million.

    Stocks that contributed significantly to the volumes include MLCF, TRG, KEL, BOP and UNITY, which formed 31 percent of total volumes.

    Stocks that contributed positively include FABL (+5 points), ATLH (+4 points), HBL (+1 points), FHAM (+0 points) and AKBL (+0 points). Stocks that contributed negatively include PPL (-56 points), HUBC (-49 points), ENGRO (-47 points), FFC (-45 points) and OGDC (-30 points).

  • Rupee falls by Rs1.07 via import, corporate payments

    Rupee falls by Rs1.07 via import, corporate payments

    KARACHI: The Pak Rupee weakened by Rs1.07 against dollar on Monday owing to demand for imports and corporate payments.

    The rupee ended Rs159.87 to the dollar as compared with last Friday’s closing of Rs158.80 in interbank foreign exchange market.

    The foreign currency market was initiated in the range of Rs159.00 and Rs159.40 to the dollar. The market recorded day high of Rs159.95 and low of Rs159.40 and closed at Rs159.87.

    Currency analysts said that the payment pressure had further weakened the rupee value.

    The exchange rate in open market also witnessed deterioration in rupee value. The buying and selling of dollar was recorded at Rs159.50/Rs160.50 as compared with previous closing of Rs158.70/Rs159.30 in cash ready market.

  • Analysts forecast 100bps increase in policy rate

    Analysts forecast 100bps increase in policy rate

    KARACHI: The State Bank of Pakistan (SBP) is scheduled to announce its monetary policy on July 16, 2019 (Tuesday) and analysts forecast central bank may increase key policy rate by another 100 basis points.

    Analysts at Arif Habib Limited said that the central bank to increase its policy rate by 100bps to 13.25 percent.

    “Primary reason for this increase in policy rate, in our view, is to keep Real Interest Rates positive in light of rising inflation during 1QFY20 on the back of increase in the prices of administered utilities (electricity and gas).”

    Average inflation for 1QFY20 is expected to settle at 12.11 percent, while a policy rate of 12.25 percent would imply a real interest rate of just 14bps.

    The data for the past 48 months exhibits that average real interest rates have remained approx. 2.3 percent, while under the last IMF program (September 2013 to September 2016) real interest rates hovered at an average of 3.1 percent.

    Therefore, it seems unlikely that the central bank would let the real interest rates go negative or below one percent. The staff report document also states that real interest rates would be kept positive to counter inflation.

    On the external front, persistent Current Account Deficit continues to weigh in on the economy despite a substantial decline in imports.

    For May 2019, CAD has declined by 47 percent YoY to USD1.1 billion. However, in terms of GDP it is still high at 5 percent.

    Therefore, in order to reduce this deficit to a sustainable level, the SBP is expected to increase its policy rate to compress demand further.

    In addition, with the advent of market determined exchange rate, a persistent Current Account Deficit might result in further weakness in exchange rate which might induce further inflation.

  • No immunity to concealed income invested in immovable properties

    No immunity to concealed income invested in immovable properties

    ISLAMABAD: People purchasing immovable properties are now required to make true declaration as immunity to such investment has been withdrawn.

    Sources in Federal Board of Revenue (FBR) told PkRevenue.com that an amnesty to undeclared amount was available for making investment in real estate business.

    The amnesty was granted through Income Tax (Fourth Amendment) Act, 2016 dated December 2, 2016 during Nawaz Sharif government and people took huge benefit from this scheme to whiten their money.

    The government has proposed to withdraw this provision through Finance Bill, 2019 as part of budget 2019/2020, presented on Tuesday. The proposal was accepted by the parliament and it has become part of Finance Act, 2019.

    The FBR in its income tax salient features said that 3 percent tax for not explaining the source of investment is being withdrawn.

    Section 236W was introduced to Income Tax Ordinance, 2001 through Income Tax (Fourth Amendment) Act, 2016 dated December 02, 2016.

    This section was granted immunity from declaring source of investment for the purchase of immovable properties.

    The FBR said that 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.

    In view of this a wide range of steps have been taken to restructure the taxation of this sector.

    The various steps being taken are as under:-

    (i) At present, 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 are also 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.

    (ii) As the increase in FBR values of immovable property is going to increase the incidence of tax on genuine buyers and sellers, the rate of withholding tax on purchase of immovable property is being reduced from 2 percent to 1 percent.

    (iii) under the immunity, 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 is being abolished and withholding tax on purchase is to be collected irrespective of the value of property.

    (iv) Under the immunity, there was no withholding tax on sale of property if the property is 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.

    (v) Previously 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.

  • Payment for clearance of imported vehicles facilitated

    Payment for clearance of imported vehicles facilitated

    The Economic Survey of Pakistan 2018/2019 stated that the payment for imported vehicles can now be made at the customs stage through foreign remittances received in the account of family members of the sender.

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  • FBR proposes retaining machinery for five years by EPZ investors for duty, tax free disposal

    FBR proposes retaining machinery for five years by EPZ investors for duty, tax free disposal

    KARACHI: Federal Board of Revenue (FBR) has proposed retaining period of machinery to five years imported by exporters for disposing of without duty and taxes.

    The FBR through SRO 805(I)/2019 proposed amendments to Customs Rules, 2001 and proposed to enhance the retaining period of machinery for manufacturers having facility within Export Processing Zones to five years in order to dispose of without duty and taxes.

    According to proposed amendments, the investors in EPZ shall retain machinery for a period of five years from the date of its import into the zone.

    Further the investors in EPZ shall be allowed to dispose of machinery in the tariff are after filing goods declaration subject to fulfillment of conditions of Import Policy Order upon payment of duty and taxes on the following terms, namely:

    01. If sold or otherwise disposed of before the expiration of three years from the date of import in EPZ, full duty and taxes would be applicable.

    02. If sold or otherwise disposed of after three and before four years from the date of import in EPZ, about 75 percent of duty and taxes would be applicable.

    03. If sold or otherwise disposed of after four and before five years from the date of import in EPZ, about 50 percent of duty and taxes would be applicable.

    04. If sold or otherwise disposed of after five years from the date of import of EPZ the exporter/investor would enjoy free of duty and taxes.

    The FBR also proposed amendment to the rules regarding licensing for operating a warehouse. As per the proposed amendments the documents and condition is as:

    “The site plan of the proposed warehouse indicating the location of the premises and the details of the total area, covered area and the area proposed to be utilized for the manufacturing area of facility and for storing and bonded warehoused input goods and manufactured goods therefrom for exports, and spate other storage areas for duty paid input goods, manufactured goods there from, factory rejects and wastages, for domestic local sales, in case of a manufacturing bond.

    Another amendment in this regard is as:

    “In case of manufacturing bond, the applicant shall apply to the Regulatory Authority designated by the Collector of Customs having jurisdiction in which the unit is registered under the Sales Tax Act, 1990, and in case there are more than one unit of a proprietor, he shall apply to the Regulatory Authority designated by the Collector of Customs where the head office of the applicant is registered under Sales Tax Act, 1990.”

  • FBR directs banks to provide details of depositors receiving Rs500,000 as profit on debt per year

    FBR directs banks to provide details of depositors receiving Rs500,000 as profit on debt per year

    KARACHI: Federal Board of Revenue (FBR) has directed banks to provide details of all those persons receiving interests above Rs500,000 in a year on their deposits.

    The FBR sources said that an amendment has been introduced to Section 165A of Income Tax Ordinance, 2001 through Finance Act, 2019 and tightened laws regarding information providing by banks about their depositors.

    Prior to amendment the clause (d) of the Ordinance, the banks were required to provide a list of persons receiving profit on debt exceeding Rs1 million for filers and Rs500,000 for non-filers and tax deduction thereon during preceding financial year.

    However, after the amendment, now the banks are required to provide list of all those persons receiving profit on debt exceeding Rs500,000 – irrespective of filers and non-filers – and tax deduction thereon during preceding financial year.

    Through the Finance Act, 2019 the term non-filers has been abolished and a new Tenth Schedule has been introduced under which persons appearing on Active Taxpayers List (ATL) would be subject to reduced rate of withholding tax rates.

    Another amendment has been made through the Finance Act, 2019 to clause (a) of Section 165A of the Income Tax Ordinance, 2001, under which the banks are now required to provide a list of persons containing particulars of cash withdrawals exceeding Rs50,00 in a day and tax deducted thereon aggregating to Rs1 million or more during each preceding calendar month.

    The amendment deleted the words ‘for filers and non-filers’ due to elimination of term ‘non-filers’.

    However, banks would remain required to provide the details under clause (b) of Section 165A of the Ordinance, including a list containing particulars of deposits aggregating rupees ten million or more made during the preceding calendar month.

    Meanwhile under clause (c), the banks are required to provide a list to FBR of payments made by any person against bills raised in respect of a credit card issued to that person, aggregating to rupees two hundred thousand or more during the preceding calendar month.