Pkrevenue.com

Author: Faisal Shahnawaz

  • FBR advised reducing income tax to half for exporters other than five zero-rated sectors

    FBR advised reducing income tax to half for exporters other than five zero-rated sectors

    KARACHI: Federal Board of Revenue (FBR) has been suggested to reduce the income tax rate to half for exporters not falling under five zero-rating scheme in order to promote and diversification of exports.

    Pakistan Business Council (PBC) in its tax proposals for forthcoming budget 2019/2020 said that at present the rate of tax deduction on export proceeds under Section 154 of Income Tax Ordinance, 2001 is one percent, which is same as for five export oriented sector as well as for other than five sectors.

    The council said that in order to promote diversification of exports instead of relying on only five specified sectors, rate of tax on export proceeds should be reduced to 0.5 percent from one percent for sectors which are not covered under the five specified export oriented sectors.

    Giving rationale for the change, it said that at present sales tax zero rating is available to five specified export oriented sectors on their input materials whereas such benefit is not available to other potential export sectors.

    Moreover, gas supply is also available to five specified sectors at 600/MMBTU whereas rate of gas per MMBTU for non-conventional sectors is Rs780 in addition to GIDC, which makes potential export uncompetitive and consequently, Pakistan is unable to diversify export markets.

    “In order to compensate such exporters and to promote export of other than five sectors, rate should be decreased to five percent for such sectors,” the PBC recommended.

    The PBC further pointed out that manufacturing bond/DTRE rules are cumbersome and in certain cases lack clarity whereby many potential exporters cannot avail them. Consequently, it results in lost exports.

    Therefore, it is recommended that manufacturing bond/DTRE rules should be modified to make it easily accessible and lend full clarity to allow exporters to fulfill potential export orders.

    The proposed amendment would increase exports by facilitating existing and potential exporters.

  • PTBA recommends eliminating 12 provisions of withholding tax in next budget

    PTBA recommends eliminating 12 provisions of withholding tax in next budget

    KARACHI: Pakistan Tax Bar Association (PTBA) has recommended abolishing 12 different provisions of withholding income tax in order reduce the cost of business.

    The apex tax bar of the country in its tax proposals for upcoming budget 2019/2020 recommended rationalization of withholding tax regime and in the first step it suggested eliminating 12 withholding tax rates.

    The PTBA said that withholding tax regime significantly impacts the taxpayers and Inland Revenue Officers (IRO) alike.

    On one hand, the regime increases the cost of doing business for a taxpayer and, on the other hand, it forces IROs to devote numerous resources in monitoring of withholding taxes.

    The monitoring of taxes’ goal can be achieved by out sourcing the professional auditor firm and ability of the officer may be used for other work.

    Even with the best efforts of the IROs, it is practically impossible to plug all the leakages of taxes withheld and deposit into the national exchequer.

    “Globally the withholding tax regime is only applicable to persons whose income is difficult to determine, easier to evade or more likely to cross national boundaries. Currently, in Pakistan, withholding tax regime has been made applicable to almost all the categories of taxpayers and nature of payment under 49 provisions of law been weaved into the indirect taxes,” the PTBA said.

    PTBA recommended revamping and rationalize of Withholding Tax Regime in order to reduce cost of doing business, complexity in the taxation laws and leakages in tax collection.

    As a first step, it recommended following provisions of law may be withdrawn in which no substantial revenue is being collected in the last three years and eight months of current fiscal year:-


     

    Sr. No.SectionDescription2018-19
    [Estimated on the basis of actual up to March, 2019]    		2017-182016-172015-16
    01156BWithdrawal of balance under Pension Fund.1001368676
    02235ADomestic electricity consumption.9177923121,730
    03236BAdvance tax on purchase of air ticket.559484303495
    04236DAdvance tax on functions and gathering.965839783622
    05236FAdvance tax on cable operators and other electronic media.49241921
    06236JAdvance tax on dealers, commission agents and arhatis etc.136123123109
    07236LAdvance tax on purchase of international air ticket.1,1311,2571,331999
    08236QPayment to resident for use of machinery and equipment.
         		644619328174
    09236RCollection of advance tax on education related expenses remitted abroad543397339367
    10236SDividend in specie.320452623
    11236UAdvance tax on insurance premium.424485397–
    12.236VAdvance tax on extraction of minerals.–0.1––
    Total––––

     
     

  • Sales tax rate in Pakistan highest in region: ACCA

    Sales tax rate in Pakistan highest in region: ACCA

    KARACHI: Association of Chartered Certified Accountants (ACCA) has said that the existing sales tax rate of 17 percent in Pakistan is the highest in the region.

    The existing rate of Sales Tax at 17 percent is one of the highest in the region with an average of around 12 percent in Asia (15 percent in India and Bangladesh, 10 percent in Indonesia and just 6 percent in Malaysia), ACCA said in its tax proposals for budget 2019/2020.

    Sales Tax should be used to broaden the tax base and not as a replacement of direct taxation.

    In order to avoid the net negative costs for the economy, the rate should be brought down to single digit in a phased manner with a proposed reduction to 14 percent.

    The association also recommended harmonization of inter-provincial and federal-provincial taxation for avoiding double taxation.

    It said that the conflicts between various provincial revenue authorities and the federation are resulting in double taxation of services owing to the classification and jurisdiction disputes.

    Also, standardizing the applicable rates while also reducing them could facilitate the businesses while also increasing the tax revenues simultaneously.

    Similarly, the lack of inter-provincial harmonization also results in double taxation of services owing to the classification and jurisdiction disputes.

    These issues should be resolved to create a business-friendly environment and facilitate the tax-payers.

    Point of origination or deliverance of services can be agreed upon by all revenue authorities as the basis of classification and the resulting jurisdiction to resolve the major inconvenience to the taxpayers.

    The ACCA highlighted the issue of adjustable input tax and said with the introduction of the STRIVE system resulting online matching of invoices, the chances of sales tax fraud and/or error have been minimized.

    Therefore the current restriction of limiting the input tax adjustment to 90 percent (ninety percent) of the output tax is outdated and needs to be abolished.

    This will be in line with the principles of fairness, equity and justice for all and help restore the confidence of businesses.

    The association also pointed out revision of sales tax return and said this should be made easy and automated as with the STRIVE system in place, chance of tax fraud are minimized to the maximum possible extent as claimed by FBR.

    It further pointed out that in line with the principles of fairness, equity and justice for all, the appeals should be heard by a person not under the administrative jurisdiction/influence of FBR.

  • forex reserves decline by $78 million to $15.89 billion

    forex reserves decline by $78 million to $15.89 billion

    The State Bank of Pakistan (SBP) announced on Thursday that the country’s foreign exchange reserves decreased by $78 million, bringing the total to $15.894 billion for the week ending May 10, 2019. This decline is attributed primarily to foreign debt payments.

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  • Pakistan approaches IMF on bad economic conditions: Dr. Hafeez Shaikh

    Pakistan approaches IMF on bad economic conditions: Dr. Hafeez Shaikh

    KARACHI: Pakistan has approached the IMF for a new loan program due to bad economic conditions of the country, Advisor to Prime Minister on Finance Dr. Hafeez Shaikh said on Thursday.

    Advisor to PM Dr. Hafeez Shaikh was addressing a press conference at Governor House, Sindh. Governor Sindh Imran Ismail and Chairman Federal Board of Revenue (FBR) Shabbar Zaidi was also at the press conference. A large number of businessmen were also at the event.

    He said that in order to strengthen the economic condition the government had planned sort-, medium- and long term programs.

    The advisor and the FBR chairman briefed about the IMF loan program and amnesty scheme.

    Imran Ismail said that the government wanted to resolve industries problem at their doorstep.

    In this regard Sindh Industrial Liaison Committees were formed to speed up the resolution process.

    On the occasion, FBR chairman said that the latest amnesty scheme was supported by the entire business community.

    He said that amnesty scheme would generate sizeable revenue which would bode well for the country’s economy.

  • KSE-100 ends down 321 points on panic selling

    KSE-100 ends down 321 points on panic selling

    KARACHI: Pakistan Stock Market (PSX) on Thursday fell by 321 points in panic selling over significant decline of rupee against dollar.

    The benchmark KSE-100 index of PSX closed at 33,971 points as against 34,292 points showing a decline of 321 points.

    Analysts at all the gains made yesterday got eroded in early trading. During the session, the index slid by 717 points however, recovered by the end resulting in closing of – 321 points.

    Panic selling ensued increase of Dollar in inter-bank market.

    The spread widened in early trades that caused investors to get jittery, which was followed by across the board selling.

    Cement, Steel and Auto Sector scrips received most of bantering whereas selling was generally observed in scrips that positively relate to increase in rupee dollar parity. Buying activity was seen mid day that resulted in recovery of ~500 points.

    By the end of session, SBP’s notification for release of Monetary policy on May 20.

    Sectors contributing to the performance include E&P (+78 points), Power (+16 points), Banks (-112 points), Cement (-69 points), O&GMCs (-62 points), Fertilizer (-49 points), Pharma (-21 points).

    Volumes declined from 111 million shares to 109 million shares (-2 percent DoD). Average traded value however, declined by 16 percent DoD to reach US$ 26.5 million as against US$ 31.5 million.

    Stocks that contributed significantly to the volumes include KEL, PIBTL, UNITY, TRG and PSX, which formed 35 percent of total volumes.

    Stocks that contributed positively include POL (+55 points), PPL (+41 points), HUBC (+27 points), PAKT (+9 points) and NESTLE (+6 points). Stocks that contributed negatively include HBL (-38 points), LUCK (-25 points), PSO (-23 points), MCB (-21 points) and OGDC (-19 points).

  • Dollar touches record high of Rs146.52 to close in interbank

    Dollar touches record high of Rs146.52 to close in interbank

    KARACHI: The Pak Rupee depreciated massively against dollar to end at record low of Rs146.52 by shedding Rs5.12 in the single day trading.

    The exchange rate hit Rs148 for one dollar in midday trading. However, the local unit recovered slightly.

    The exchange rate in the Interbank market closed today at Rs146.52 per US$ from previous day’s close of Rs141.40 to the dollar: Chief Spokesman State Bank of Pakistan (SBP) said after sharp decline of local currency.

    “This movement reflects demand and supply conditions in the foreign exchange market,” Chief Spokesman State Bank.

    It will help in correcting market imbalances, he added.

    The exchange rate in open market was also witnessed massive decline in local currency value.

    The buying and selling of dollar was recorded at Rs146.00/Rs147.50 from previous day’s closing of Rs143.50/Rs144.00 in cash ready market.

  • SBP to announce monetary policy on May 20

    SBP to announce monetary policy on May 20

    KARACHI: State Bank of Pakistan (SBP) will announced monetary policy for next two months on Monday, May 20, 2019.

    A statement issued by the SBP on Thursday said that it would announce Monetary Policy on Monday, May 20, 2019.

    In the last monetary policy announcement on March 29, 2019, the central bank increased the policy rate by 50 basis points to 10.75 percent effective from April 01, 2019.

  • Shipping agents demand forming task force to eliminate under/over invoicing

    Shipping agents demand forming task force to eliminate under/over invoicing

    KARACHI: Shipping agents have demanded the Federal Board of Revenue (FBR) to form taskforce / joint investigation team (JIT) to eliminate the menace of under / over invoicing, mis-declaration and smuggling in Pakistan.

    In a letter to the chairman of FBR Syed Muhammad Shabbar Zaidi, the Pakistan Ship’s Agents Association (PSAA) congratulated the chairman for his appointment as chief of the national tax collecting agency.

    The association said that the menace of smuggling was causing massive losses to the exchequer and also resulting in bad name of the country.

    “It is everybody’s knowledge that none of these nefarious activities can be carried out without facilitators/go-betweens,” the association said.

    “We believe that some of these facilitator types have FIRs already registered against them they should be fully investigated / dormant files should be revived.”

    “FBR should appoint a taskforce / JIT to address this issue on a war footing and all these culprits should be vigorously be pursued, caught and prosecuted.”

    The association said that customs intelligence, FIA, all border authorities, ministry of interior etc should all form special JIT to finish off this menace under the direct monitoring of the Prime Minister of Pakistan.

    The association further said that such types of facilitators were the enemies of the economy of the country. “We have also requested all our members from the maritime sector to keep a special watch for such facilitators and report immediately to concerned authorities.”

  • Rupee hit historict low against dollar in interbank market

    Rupee hit historict low against dollar in interbank market

    Karachi – The Pakistani Rupee experienced a significant downturn in mid-day trading on Thursday, reaching a historic low against the US Dollar at Rs 148 in the Interbank Foreign Exchange Market.

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