ISLAMABAD: The government is likely to maintain the current export tariffs and tax slabs in the forthcoming budget, according to Abdul Razak Dawood, Advisor to the Prime Minister on Commerce and Investment.
(more…)Author: Faisal Shahnawaz
-
Stock market gains 76 points amid profit taking
KARACHI: The stock market gained 76 points on Tuesday amid profit taking during the day.
The benchmark KSE-100 of Pakistan Stock Exchange (PSX) closed at 33,993 points as against 33,917 points showing an increase of 76 points.
Analysts at Arif Habib Limited said that courtesy of crudes’ performance in the international market, KSE-100 posted decent gains during the session, realizing +469 points and closing the session +76 points.
E&P and OMCs remained in the limelight but also saw profit booking near yesterday’s levels and caused OGDC and PPL to settle low.
Cement and Fertilizer sectors saw further weakness, whereas Banks also contributed to downside in Index. Cement sector topped the chart with 58.4 million shares, followed by O&GMCs (38.7 million) and Technology (26.9 million). Among scrips, HASCOL realized trading volumes of 33.8 million shares, followed by UNITY (25.4 million) and FCCL (17.8 million).
Sectors contributing to the performance include E&P (+83 points), O&GMCs (+49 points), Food (+13 points), Cement (-39 points), Banks (-23 points).
Volumes increased from 216.5 million shares to 261 million shares (+21 percent DoD). Average traded value declined by 1 percent to reach US$ 57.6 million as against US$ 58.4 million.
Stocks that contributed significantly to the volumes include HASCOL, UNITY, FCCL, MLCF and PAEL, which formed 41 percent of total volumes.
Stocks that contributed positively to the index include PPL (+34 points), ENGRO (+34 points), OGDC (+27 points), PSO (+23 points) and POL (+18 points). Stocks that contributed negatively include HBL (-33 points), FFC (-29 points), COLG (-19 points), EFERT (-10 points), and KTML (-10 points).
-
Rupee appreciates by 26 paisas against dollar
KARACHI: The Pak Rupee gained another 26 paisas against dollar on Tuesday owing to better economic indicators amid coronavirus pandemic.
The rupee ended Rs159.65 to the dollar from previous day’s closing of Rs159.91 in interbank foreign exchange market.
The local currency gained 56 paisas during past two days.
Currency experts said that the rupee appreciated due to inflows of IMF funds and decline in international oil prices.
They said that local currency would gain in coming trading days due to fall in international oil prices and improved external accounts.
They said that that improved foreign direct investment and shrinking current account deficit helped the local currency to make gain.
The inflow of Foreign Direct Investment (FDI) into Pakistan has witnessed sharp growth of 137 percent during first nine months (July – March) 2019-2020.
The FDI increased to $2.15 billion during first nine months of current fiscal year as compared with $905 million in the corresponding period of the last fiscal year.
Current account deficit (CAD) has contracted by 73 percent during first nine months (July – March) 2019/2020 due to significant decline in import bill.
The current account deficit fell to $2.77 billion during first nine months of current fiscal year as compared with $10.28 billion in the corresponding period of the last fiscal year.
-
FPCCI suggests measures to broaden tax base, improving tax to GDP ratio
KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has suggested measures to broaden tax base and improving tax to GDP ratio.
(more…) -
Exemption from withholding tax at import stage suggested
KARACHI: Pakistan Business Council (PBC) has suggested the tax authorities to exempt withholding tax at import stage for avoiding generation of tax refunds and expansion of industry.
In its proposals for budget 2020/2021, the PBC recommended exemption from collection of withholding tax under section 148 at import stage and exemption for manufacturing concerns under Section 153.
It said that procedures and rules for obtaining exemption certificates for import of plant and machinery and raw material by tax payers have serious restrictions, which causes hardship.
Corporate manufacturing sector should be excluded from the purview of income tax withholding at import stage under section 148 as well as from tax deduction on local supply under section 153.
Similar exemption is already given to the greenfield industries through the Finance Supplementary Second Amendment Act 2019 announced in March 2019.
The same exemption, however, is not available, for the brownfield expansion.
Moreover, all the companies engaged in manufacturing should be exempt from withholding of tax under section 153.
Similar exemption is available for Sales Tax in the Sales Tax Special Procedure (Withholding) Rules, 2007 via SRO 586 dated July 1, 2017.
Alternatively, issuance of exemption certificate from withholding under sections 148 and 153 should automatically trigger on the FBR portal based on payment of quarterly advance tax under section 147 to avoid harassment of genuine taxpayers.
This will enable taxpayers to avoid creating huge tax refunds and focus on more expansion.
This would increase the investments for brownfield capacity expansion as well and would provide a meaningful relief (similar to greenfield expansion) with regard to BMR and extension / expansion. Further, it will also attract foreign direct investment in the form of new expansion ventures as well as partnerships and hence will also result in export growth.
-
PVC, PMC material allowed sales tax zero rating; Export Policy Order amended
ISLAMABAD: The ministry of commerce has allowed zero rating of sales tax on supply of PVC and PMC meterials from Export Processing ZOnes, Manufacturing Bonds and export oriented units.
The commerce ministry on Monday issued SRO 351(I)/2020 dated May 04, 2020 to amend Export Policy Order 2016 regarding supply of PVC and PMC materials.
According to the amendment: “… the export of PVC and PMC (HS Code 3901-3914) materials from the Export Processing Zones, manufacturing bonds and export oriented units shall be eligible for zero rating of sales tax.
Through the SRO the ministry also amended the negative list for export to Afghanistan.
The SRO omitted the entry of PVC and PMC from the third schedule of the Export Policy Order 2016.
-
FBR extends time limit for filing goods declaration
KARACHI: Federal Board of Revenue (FBR) has extended time limit for filing goods declaration in order to facilitate trade considering problems faced during lockdown.
The FBR on Monday issued a notification for extension in time limit for filing of goods declaration. The FBR said that it had further extended the time for filing of goods declaration for all IGMs filed between April 07, 2020 to May 09, 2020 provided that this order shall not be applicable in case any fine or penalty had already been paid by the importers.
Earlier, Khurram Ijaz, Vice President, Federation of pakistan Chambers of Commerce and Industry (FPCCI) on May 02, 2020 requested the FBR for further extension in time limit for filing of goods declaration.
Khurram Ijaz in his communication with the FBR appriciated the revenue board for extending the time for filing of goods declaration from 10 days of arrival of goods to further 15 days (total 25 days) for all IGMDs filed between March 17, 2020 and April 07, 2020.
However, the FPCCI vice president apprised the FBR that continued extension in lockdown by the government causing delay in timely filing of goods declaration, hence opportunity provided the revenue board should be extended up to the current lockdown till May 09, 2020.
-
Karachi Chamber urges shipping lines to waive detention charges
KARACHI: Karachi Chamber of Commerce and Industry (KCCI) has urged shipping lines to waive detention and other charges considering extraordinary situation due to coronavirus and lockdown.
To support the consignees in Pakistan during the ongoing difficult times, President KCCI Agha Shahab Ahmed Khan urged all shipping lines and their agents in Pakistan to give total waiver of detention charges and any penalties or charges under other heads on all consignments that landed from March 10, 2020 up to May 31. 2020.
In separate letters sent to All Pakistan Shipping Association and Pakistan Ships’ Agents Association, President KCCI pointed out that in the present extra-ordinary circumstances, the shipping lines and agents have a moral and ethical responsibility to extend relief to the consignees and waive the entire detention charges and any other penalties or charges on FCL and LCL consignments, to facilitate clearance and delivery of cargo to the consignees.
“It is important to mention that the Ministry of Maritime Affairs and KPT have also approved the waiver of port demurrage and allowed additional 10 days of free storage for the imported cargoes. But unfortunately due to accumulated detention charges importers are unable to clear their containers,” he added.
He said that due to the lockdown during the months of March and April 2020 imposed by the government to prevent the spread of coronavirus pandemic, many importers have not been able to clear the import cargoes within the stipulated free detention period allowed.
Consequently, very large amounts of detention charges and penalties have accumulated which the consignees are unable to pay, while also a large number of containers have piled up at the ports.
He informed that during the last few weeks, KCCI received a large number of representations from trade and industry which are facing heavy losses due to the exorbitant container detention charges by including shipping agents and representatives of shipping lines.
The losses are over and above those caused by a sharp decline in prices of various commodities and products which have been imported by these consignees, thus making it impossible to pay for the heavy detention and other penal charges demanded by the shipping agents and their principals.
Many such entities have been pushed to a situation of Force Majeure.
Agha Shahab further noted with deep concern that the same shipping lines have voluntarily extended concessions and relief to their clients in India while they have refused to allow any concession to consignees based in Pakistan.
He was of the opinion that Pakistan’s shipping trade has been a lucrative source of income for shipping lines who have earned decent profits from this market for many years.
“It is time they support the consignees in a situation where the entire global economy is passing through an unprecedented crisis and all business entities in Pakistan are incurring heavy losses as a consequence of extra-ordinary circumstances,” he stressed.
-
SBP decides not to issue fresh currency notes for Eid ul Fitr
KARACHI: State Bank of Pakistan (SBP) on Monday said that it will not issue fresh currency notes on this Eid ul Fitr.
The decision has been taken due to measures taken by the government to prevent spread of COVID-19.
The SBP issued a notification suspending the issuance of fresh currency notes to public.
The SBP said that the bank’s management had taken multiple precautionary measures to ensure social distancing and mitigate the spread of COVID-19.
“These include but are not limited to performing of only essential / critical functions, making comprehensive work from home arrangements, ensuring workplace SOPs, issuance of medical advisories, etc.”
Accordingly, the bank’s COVID-19 committee had decided not to issue fresh notes to general public and employees / ex-employees of SBP and its subsidiaries on occasion of Eid-ul-Fitr 2020.
-
PSX proposes funded pension scheme
KARACHI: Pakistan Stock Exchange (PSX) has proposed funded pension scheme that should offer old age benefits to retired employees at public sector enterprises and government workers, without putting burden on the annual budget.
At present, Pakistan’s pension scheme for government employees is an un-funded, pay-as-you-go scheme. Government of Pakistan exclusively finances the pension expenditure by obtaining a provision in the annual budget for this purpose.
This has all the making of an impending pension crisis in future, and places unfair burden on future generations. In case of public sector enterprises too, much of the pension liability remains unfunded.
The future monetary obligations are taken to be met from taxation, which places undue fiscal burden and responsibility on future generations. Age analysis of population suggests growing state pension expenses given the expected increase in the older age group.
These conditions have led to increasingly stressed pension arrangement.
Pension’s system reforms are focused on extending coverage to funded pension systems, which are professionally managed, extend to the informal sector, and facilitate switching from the existing employer schemes.
While in the public sector, funds have been created at the provincial level to pre-fund the future liability.
The PSX said that government of various countries have actively worked to provide financial security for their aging populations by maintaining adequately funded pension funds.
These pension funds invest in a diversified range of global assets including equities, bonds, mutual funds, ETFs, and even real estate, infrastructure, and alternative assets.
In Canada, the CPPIB (Canada Pension Plan Investment Board) is the government’s primary pension scheme, and has grown to become one the largest pension funds in the world.
The CPPIB invests in the full stack of assets outlined above and returns are used to finance government’s pension liabilities every year. This takes the burden of pensions away from the annual budget.
The CPP fund now manages over $409.5 billion in asset, up from $128 billion in 2010.
An actively managed government pension fund in Pakistan will also help channel investment towards capital markets, since equities feature heavily at global pension funds.
In Pakistan, the federal government could set up such an investment holding as a single-purpose asset management company with 100 percent control, and run by professional investment managers.
The government should start funding its pension liabilities to avert a future pension crisis and encourage capital formation in Pakistan. An adequately funded pension scheme would offer old age benefits to retired employees at public sector enterprises and government workers, without putting burden on the annual budget. Further, it is recommended that a certain percentage of the funded pension scheme be invested in the capital markets.
With Pakistan facing very high levels of poverty and the Government of Pakistan facing a rise in the old age population and having a scarcity of resources and funds to provide any old age benefits. An adequately funded pension scheme is one of the resources which the Government of Pakistan could offer to facilitate retired public sector employees.
This would result in improvement in liability management of Federal Government Employees Pension Scheme.
Appropriate amendment to be made in the Income Tax Ordinance, 2001.