Pkrevenue.com

Author: Mrs. Anjum Shahnawaz

  • FBR proposes reducing retaining period of imported plant, machinery by export units for disposal at zero percent duty, taxes

    FBR proposes reducing retaining period of imported plant, machinery by export units for disposal at zero percent duty, taxes

    ISLAMABAD: Federal Board of Revenue (FBR) has proposed to relax the condition of disposal of plant and machinery by export units at zero percent of duty and taxes to five years as compared with prevailing 10 years.

    The FBR on Wednesday issued SRO 747(I)/2019 to proposed amendments in the Export Oriented Units and Small and Medium Enterprises Rules, 2008.

    Through proposed amendment the FBR allowed the retaining imported goods including plant and machinery for a maximum period of five years as against prevailing ten years.

    The FBR through SRO 327(I)/2008 notified “The Export Oriented Units and Small and Medium Enterprises Rules, 2008” to facilitate the exporters and promote the exports.

    The FBR proposed that there will be no duty or tax if items imported by export oriented unit is sold or otherwise disposed of after five years from the date of importation. The existing retaining period is ten years.

    The FBR proposed that there will be full duty and tax if sold or otherwise disposed of before the expiration of three years from the date of importation. The existing period of attracting full duty and taxes is five years.

    It is proposed that there will be 75 percent duty and taxes if sold or otherwise disposed of after three and before four years from the date of importation. The existing period for this category is ‘after five and before seven and half years’ from the date of importation.

    The FBR also proposed to impose 50 percent of duty and taxes if sold or otherwise disposed of after four and before five years from the date of importation. The existing time period for this category is ‘after seven and half years and before ten years.’

    In the latest SRO the FBR also proposed to amend the word ‘Collector’ with the Regulatory Authority. The FBR also defined the regulatory authority is the additional collector of customs designated by the collector of customs as the regulatory authority in relation to an export oriented unit, in whose jurisdiction the place of business or manufacturing unit of the export oriented unit applicant, duly registered under the Sales Tax Act, 1990, is situated.

  • FBR directs customs to ensure retail price print on imported goods

    FBR directs customs to ensure retail price print on imported goods

    KARACHI: Federal Board of Revenue (FBR) has directed customs authorities to ensure printing of retail prices on imported goods for collection of sales tax while clearance of consignments.

    The Inland Revenue Policy Wing issued directives on Wednesday to Inland Revenue and Customs for the implementation of changes brought in to Sales Tax Act, 1990 through Finance Act, 2019.

    It said that the locally manufactured goods specified in Third Schedule are already chargeable to sales tax on the basis of retail price.

    Now, through amendment in section 3(2)(a) of Sales Tax Act, 1990, retail price taxation has also been made applicable to imported goods.

    The importers are required to print the retail price in the manner prescribed in the aforesaid clause and such goods shall be assessed on the basis of declared retail price and not on the basis of customs value under section 25 of the Customs Act, 1969.

    “All Model Customs Collectorates (MCCs) are requested to ensure that the declared retail prices are duly printed in the prescribed manner and that the sales tax is charged on the basis of such declared retail price,” the FBR said.

    Twelve new serial numbers have been added to Third Schedule through Finance Act, 2019 such as electric and gas appliances, motorcycles, auto-rickshaws biscuits, tiles etc.

    The FBR directed Large Taxpayers Units (LTUs) / Regional Tax Offices (RTOs) / MCCs should ensure application accordingly.

    The FBR defined the value of supply, which has been amended to provide for application of retail price taxation to imported goods, and also to incorporate provisions from rescinded rules and STGOs.

    These modifications are enumerated below:

    Amendment in clause (d) to exclude imported Third Schedule items from purview of application of ‘customs value’ determined under section 25 of the Customs Act, 1969. These items are to be assessed on the basis of declared retail price. Further such price is also required to be printed on imported goods as stipulated in clause (a) of section 3(2) of the Sales Tax Act, 1990.

    (ii) Substitution of clause (f) in section 2(46) pertains to value of supply in case of toll manufacturing, which has defined to be the charges received in lieu of value addition carried out on goods;

    (iii) Newly added clause (h) defines value to be energy purchase price in case of supply by IPPs; and

    (iv) Another new clause (i) transposes the provisions relating to exclusion of late payment surcharge from value, in case of supply of electricity and gas by the distribution companies, from the rescinded Sales Tax Special Procedures Rules, 2007.

  • No compromise on documentation; PM refuses to withdraw CNIC condition

    No compromise on documentation; PM refuses to withdraw CNIC condition

    KARACHI: Prime Minister Imran Khan on Wednesday showed firm resolve to document the economy and flatly refused demands of business community to withdraw condition of CNIC on sales above Rs50,000.

    Representatives of Federation of Pakistan Chambers of Commerce and Industry (FPCCI) and Karachi Chamber of Commerce and Industry (KCCI) met the prime minister at the Governor House. The entire prime minister’s team of finance and commerce was also present at the meeting.

    The business community urged the prime minister to withdraw the condition of CNIC at the time of sales, which was introduced through Finance Act, 2019.

    Sources said that the Prime Minister had refused the demand and told the business community that the businesses had to be documented. The prime minister said requirement of CNIC / information on above Rs50,000 sales was quite justified.

    The prime minister said that he wanted to see Pakistan grow on Turkish model. He further said that the government wanted to take along the business community on journey to growth.

    Prime Minister Imran Khan told the business community that he had arrived Karachi to resolve problems of trade and industry. He said that the government wanted to ease in doing business.

    Our priority to eradicate poverty and accelerate economic growth, he added.

    After the meeting business community has expressed disappointment.

    Mirza Ikhtiar Baig, senior FPCCI leader, while talking to media said that the apex body had presented all the problems at the meeting that are hampering the economic growth.

    The prime minister has been informed about protests by small associations. He said that the FPCCI had urged the prime minister to restore zero rated for export sector.

    He said that the interest rate by State Bank was on the rise and it would make difficult for industry to continue the production activities. On the other hand the FBR had also not withdrawn several levies on the export sector.

    The prime minister has been informed that reforms should bring in phases.

    Another meeting was held with export sector in which the prime minister listened to their problems. However, the export sector was also not happy to resolve their issues at the meeting.

  • Foreign remittances grow by 9.68pc to $21.84bn in 2018/2019

    Foreign remittances grow by 9.68pc to $21.84bn in 2018/2019

    Foreign remittances to Pakistan have surged by an impressive 9.68% during the fiscal year 2018/2019, reaching an unprecedented high of $21.84 billion.

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  • Share market remains range bound amid low volumes

    Share market remains range bound amid low volumes

    KARACHI: The stock market ended range bound on Wednesday as investors were in a fix over lack of triggers.

    The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) ended down at 33,840 points as against 33,856 points showing a decrease of 16 points.

    Analysts Arif Habib Limited said the market remained range bound today amidst low volumes.
    The fourth consecutive session ended in below 60 million volumes and one of the lowest in recent days.

    Absence of any significant trigger kept the investors in a fix whether to invest at these levels. Cement sector led the volumes table with 7.7 million shares, followed by Engineering (4.9 million) and Banks (4.5 million).

    Major volumes were observed in DSL with 3.4 millino shares, followed by Quice (2.5 million) and MLCF (2.5 million).

    PM’s visit to Karachi failed to motivate investors to take a view on market.

    Sectors contributing to the performance include Power Generation (-15 points), E&P (-12 points), Automobile Assembler (-9 points), Fertilizer (-5 points), Pharmaceuticals (-3points).

    Volumes decreased by 33 percent DoD to reach 40.30 million as against 60.16 million. Average traded value also decreased by 33 percent to reach US$ 10.3 million as against US$ 15.4 million.

    Stocks that contributed significantly to the volumes include DSL, QUICE, MLCF, SNGP and CHCC, which formed 29 percent of total volumes.

    Stocks that contributed positively include SNGP (+12 points), HBL (+12 points), ENGRO (+11 points), LUCK (+7 points) and CHCC (+3pt). Stocks that contributed negatively include HUBC (-19 points), EFERT (-11 points), PPL (-7 points), OGDC (-5 points) and SHFA (-4 points).

  • Rupee falls by 50 paisas despite IMF first tranche

    Rupee falls by 50 paisas despite IMF first tranche

    KARACHI: The Pak Rupee ended down by 50 paisas against dollar on Wednesday despite a tranche of $991.4 million received under IMF loan program.

    The rupee closed at Rs157.88 to the dollar from previous day’s closing of Rs157.38 in interbank foreign exchange market.

    The foreign currency market was initiated in the range of Rs157.45 and Rs157.65. The market recorded day high of Rs157.95 and low of Rs157.65 and closed at Rs157.88.

    The exchange rate in open market also witnessed depreciation in local unit.

    The buying and selling of the dollar was recorded at Rs157.50/Rs158.50 from previous day’s closing of Rs156.70/Rs157.70 in cash ready market.

  • Engro starts commercial operation of 660MW coal-fired power project

    Engro starts commercial operation of 660MW coal-fired power project

    KARACHI: Engro Powergen Thar (Private) Limited on Wednesday started commercial operation of its 660 Megawatts Coal-Fired power generation complex at Thar Block-II, District Tharparkar, Sindh.

    In a notice to Pakistan Stock Exchange (PSX), Engro Corp said that a power purchase agreement on May 04, 2015 was entered into between Engro Energy Limited (EEL’s) subsidiary EPTL and the National Transmission and Dispatch Company Limited, through its Central Power Purchasing Agency on behalf of ex-WAPDA Distribution Companies, in relation to EPTL’s 660 MW (Gross) coal fired power generation complex at Thar Block-II, District Tharparkar, Province of Sindh, Pakistan.

    It said that pursuant to the terms of PPA, EPTL has declared the commercial operation date of the project with effect from July 10, 2019.

    Furthermore, EEL’s associated company, namely, Sindh Engro Coal Mining Company Limited (a joint venture between Sindh government, EEL, Thal Limited, Hub Power Company Limited, Habib Bank Limited, CMEC Thar Mining Investment Limited and Houlinhe Open Pit Coal Investment Company) (SECMC) has also declared its commercial operation on the COD date and SECMC shall start the supply of Thar coal to EPTL for its project.

    The company said that the projects would usher in a new era of energy security and prosperity for Pakistan which would not have been possible without the support extended by the provincial and federal governments and all other private stakeholders.

  • Government to borrow Rs6,300 billion through auction of Market Treasury Bills in first quarter

    Government to borrow Rs6,300 billion through auction of Market Treasury Bills in first quarter

    KARACHI: The government likely to borrow an amount of Rs6,300 billion from commercial banks through auction of market treasury bills (MTBs) during first quarter (July – September) of current fiscal year.

    According to auction target for MTBs issued by State Bank of Pakistan (SBP), the amount would be raised through seven auctions during the period.

    The government borrows from commercial banks through sale of commercial papers for budget financing.

    The details of auctions showed the government would borrow primarily to repay the matured amount. The details further showed that out of Rs6,300 billion, an amount of Rs5,065 billion would be spent on repayment against matured amount.

    The remaining amount of Rs1,234.55 billion would be utilized for budget financing.

    Banking analysts said that the government had decided to change the borrowing pattern. During the past fiscal year most of the borrowings were made through central bank. However, the government under IMF loan program agreed not to borrow from the SBP.

    The auction target showed that an amount of Rs300 billion would be raised through sale of Pakistan Investment Bonds (PIBs) of fixed rates.

    While, an amount of Rs400 billion would be raised through sale of PIB (floating rates).

    Analysts said that the banks were taking more interest in government maturities due to frequent increase in policy rate by the SBP. The banking sector is anticipating more hike in interest rate by the SBP during remaining months of current year.

  • Foreign investors’ perception over security environment further improves

    Foreign investors’ perception over security environment further improves

    KARACHI: The foreign investors have expressed satisfaction over improved security environment in Pakistan, according to a report released by Overseas Investors Chamber of Commerce and Industry (OICCI) on Tuesday.

    OICCI’s 2019 annual security survey, conducted in June 2019, shows that the foreign investors, OICCI members’, perception of the country’s security environment has further improved significantly compared to the already improved security situation recorded in the 2018 survey.

    The annual security survey, conducted among OICCI members only, is one of the critical annual assessment of the operating conditions in Pakistan and is taken very seriously by the potential foreign investors, relevant diplomats and other stakeholders interested in doing business in Pakistan.

    Whilst overall responses clearly convey continued improvement in the general security environment, the increase in street crimes, an attack on Chinese Consulate in Karachi, sporadic religious/communal attacks in Baluchistan province and some consequences of the recent spat between India and Pakistan, are also reflected in this survey.

    The 2019 Survey findings re-affirm that security environment all over the country has improved as compared to the already improved situation at the time of the last 2018 survey.

    The improvement in security environment ranges from 40 percent in Baluchistan to over 70 percent in Karachi and Lahore, the two cities where most of the head offices of OICCI members are located.

    The visibly improved security situation has boosted confidence of foreign investors and is reflected in over 65 percent increase in the visit to Pakistan by OICCI members’ senior HQ/Regional management.

    Furthermore most of the Board of Directors and management review meetings are now taking place in the country.

    The increase in visits is a vote of confidence in the improved security environment, although there were also some postponement of visits, mainly due to closure of air space after India Pakistan air encounters in March 2019.

    This is a strong indicator that Pakistan as a destination for investors has improved significantly with less concern on overall security situation. This improved security environment has allowed many foreign business visitors and trade delegations being granted travel permissions for their visits to Pakistan from their respective embassies and travel security agencies.

    Commenting on the survey, the OICCI President Ms. Shazia Syed said that ‘the 2019 Security survey once again depicts that security environment in Pakistan for all key stakeholders, has substantially improved not only for the survey participants, but also for their customers, suppliers and employees”.

    Ms. Shazia further added “Overall, OICCI 2019 Security Survey feedback points to a clear appreciation by the foreign investors of the various initiatives of the government and the security agencies in proactively tackling the security, law and order challenges which had serious repercussions on the image of the country as a safe destination for FDI.”

    The 2019 security survey results in respect of serious crimes like abductions/hostage taking and “Bhatta” demands indicated a massive reduction, led by KPK where 88 percent of respondents have reported a decrease over last year, followed by Lahore with 87 percent and Rest of Punjab/Karachi with 83 percent.

    Even in Quetta and rest of Baluchistan serious crimes are reported to be down by over 60 percent, as compared to last year.

    In respect of petty crimes i.e. mobile, cash snatching and car snatching, also the survey results indicate a downward trend ranging from 92 percent in Islamabad, closely followed by 87 percent in Lahore, 83 percent in Karachi, 82 percent in Peshawar and 66 percent in Quetta.

    More than 300 foreign visitors from OICCI members HQ/Regional offices came to Pakistan during the year. The highest number were from European countries, followed by China,, UK, UAE, US and rest of Asia.

    OICCI is the largest chamber of commerce in terms of economic contributions in Pakistan. The 190 OICCI members contribute about a third of the country’s total tax collections, invested $ 2.7 billion last year in new investments and employ about one million people, besides contributing significantly to the socio economic development of the community through their substantive CSR initiatives.

  • FBR delegates powers to IR officers for International Tax Operations directorate

    FBR delegates powers to IR officers for International Tax Operations directorate

    ISLAMABAD: Federal Board of Revenue (FBR) on Tuesday authorized officers of Inland Revenue to exercise powers and perform functions for the newly established Directorate General of International Tax Operations.

    The FBR designated Chief Commissioner / Commissioner of Inland Revenue to perform as Director General of International Tax Operations. The director general shall have jurisdiction over persons or classes of persons carrying on business or residing in areas, within the territorial jurisdiction of Pakistan.

    Similarly, the commissioner of Inland Revenue has been designated as director of International Tax Operations to have jurisdiction over .all persons or classes of persons carrying on business, falling within the jurisdiction of regional tax offices and large tax units.

    The FBR also designated assistant and deputy directors of International Tax Operations.

    Through Finance Act, 2017 Directorate General of International Tax Operations was established by amending Section 230E of Income Tax Ordinance, 2001.

    The section stated:

    (l) The Directorate General of international Tax Operations shall consist of a Director General and as many Directors, Additional Directors, Deputy Directors, Assistant Directors and such other officers as the Board may, by notification in the official Gazette, appoint.

    (2) The Board may, by notification in the official Gazette,

    (a) specify the functions and jurisdiction of the Directorate General and its officers; and

    (b) confer the powers of authorities specified in section 207 upon the Directorate General and its officers.

    (3) The functions and powers of the Directorate General of International Tax Operations shall include but not limited to-

    (a) receive and send information from other jurisdictions under spontaneous, automatic and on demand exchange of information under exchange of information agreements;

    (b) levy and recover tax by passing an assessment order under section I23(1A) in case of undeclared off-shore assets and incomes;

    (c) receive, transmit and exchange country reports to the jurisdictions that are parties to international by country agreements with Pakistan; and

    (d) conduct transfer pricing audit in cases selected for such audit by the Director General of international Tax Operations.

    (4) The Board may, by notification in the official Gazette, specify the criteria for selection of the taxpayer for transfer pricing audit.

    Explanation- For the removal of doubt, it is clarified that transfer pricing audit refers to the audit for determination of transfer price at arm’s length in transactions between associates and is independent tax audit under section 177 and 2l4C which is audit of the income tax affairs of the taxpayer.