KARACHI: Karachi Tax Bar Association (KTBA) has recommended abolishing minimum tax for listed companies and should be reduced in other cases.
(more…)Author: Faisal Shahnawaz
-
KTBA suggests reduction in corporate tax rate to 25%
KARACHI: The Federal Board of Revenue (FBR) has been suggested to reduce the corporate tax rate to 25 per cent from existing 29 per cent in order to attract both local and foreign investments.
Karachi Tax Bar Association (KTBA) in its proposals for budget 2022/2023, suggested the FBR to bring down the corporate tax rate by amending Part 1, First Schedule of the Income Tax Ordinance, 2001.
READ MORE: Tax incentives proposed for making new investments
The tax bar said that currently corporate rate of tax in Pakistan is 29 per cent and it goes up due to Workers Welfare Fund (WWF) and Workers’ Profit Participation Fund (WPPF) up to 36 per cent which is higher than the average tax rate in Asia i.e. 21.32 per cent. The higher corporate tax rate in Pakistan has increased cost of doing business and regionally uncompetitive position.
READ MORE: Tax credit extension for employment generation
The KTBA proposed: “The corporate rate of tax should be decrease up to 25 per cent by gradually decreasing 1 per cent every year. This proposition was available previously under the Ordinance which was deleted through Finance Act 2019.”
Further, the tax bar also suggested that the rate of tax on small companies should also gradually be reduced to 15 per cent. Besides, Income of WPPF should be exempted from tax.
READ MORE: Reintroduction of tax credit on registered sales proposed
Giving rationale, the KTBA said that the high rate of tax is encouraging tax evasion and discouraging documentation of economy and corporatization. “It dis-incentivizes foreign and local investment,” it added.
The KTBA also suggested the FBR to allow tax credit for making new investments by amending sections 65B, 65D and 65E of the Income tax Ordinance, 2001. The tax bar said sections 65B, 65D and 65E are related to tax credit for investment, newly established industrial undertaking and industrial undertaking established before July 01, 2011.
READ MORE: Amendment sought in incentive to Greenfield industry
“These are not currently available to the taxpayers for new investments,” it said. Therefor it is not encouraging new investment.
“Tax credits may be provided for making investment in fresh/ existing industrial undertakings, such as tax credit under 65B of the Ordinance which may be restored. Simultaneously, time limit U/s.s 65D and 65E may be further extended up to June 30, 2025,” the tax bar said, adding that it will promote industrialization and new investment in the country.
-
Tax incentives proposed for making new investments
KARACHI: Karachi Tax Bar Association (KTBA) has suggested tax authorities to allow tax incentives for new investments in order to promote industrialization in the country.
The KTBA in its proposals for budget 2022/2023 suggested the Federal Board of Revenue (FBR) to allow tax credit for making new investments by amending sections 65B, 65D and 65E of the Income tax Ordinance, 2001.
READ MORE: Tax credit extension for employment generation
The tax bar said sections 65B, 65D and 65E are related to tax credit for investment, newly established industrial undertaking and industrial undertaking established before July 01, 2011.
“These are not currently available to the taxpayers for new investments,” it said. Therefor it is not encouraging new investment.
READ MORE: Reintroduction of tax credit on registered sales proposed
“Tax credits may be provided for making investment in fresh/ existing industrial undertakings, such as tax credit under 65B of the Ordinance which may be restored. Simultaneously, time limit U/s.s 65D and 65E may be further extended up to June 30, 2025,” the tax bar said, adding that it will promote industrialization and new investment in the country.
READ MORE: Amendment sought in incentive to Greenfield industry
Besides, the KTBA also sought extension of tax credit on employment generation under section 64B of the Income Tax Ordinance, 2001. The tax bar said a manufacturing entity was allowed a tax credit of 2 per cent subject to maximum tax credit of 10 per cent on employing every 50 employees registered with Employees Old-Age Benefit Institution (EOBI) and Sind Employees Social Security Institution (SESSI). This credit is restricted for the companies formed up to tax year 2019. The tax bar due restriction, effort to generate documented employment would go in vein.
READ MORE: FBR invites Sales Tax proposals for budget 2022/2023
The KTBA proposed that the tax credit for employment generation by manufacturers under section 64B of the Ordinance should be extended up to Tax Year 2025 at least. “It is an excellent provision for promoting employment generation along with documentation of the same,” the tax bar added.
-
Tax credit extension for employment generation
KARACHI: The Federal Board of Revenue (FBR) has been suggested to expand the tax credit on employment generation in order to create opportunities of employment.
Karachi Tax Bar Association (KTBA) in its proposals for budget 2022/2023 submitted to the FBR sought extension of tax credit on employment generation under section 64B of the Income Tax Ordinance, 2001.
READ MORE: Reintroduction of tax credit on registered sales proposed
The tax bar said a manufacturing entity was allowed a tax credit of 2 per cent subject to maximum tax credit of 10 per cent on employing every 50 employees registered with Employees Old-Age Benefit Institution (EOBI) and Sind Employees Social Security Institution (SESSI).
READ MORE: Amendment sought in incentive to Greenfield industry
This credit is restricted for the companies formed up to tax year 2019. The tax bar due restriction, effort to generate documented employment would go in vein.
The KTBA proposed that the tax credit for employment generation by manufacturers under section 64B of the Ordinance should be extended up to Tax Year 2025 at least.
READ MORE: FBR invites Sales Tax proposals for budget 2022/2023
“It is an excellent provision for promoting employment generation along with documentation of the same,” the tax bar added.
The KTBA also proposed the tax credit on 90 per cent sales should be also extended to persons making 90 per cent of purchases from persons registered under the Sales Tax Act, 1990 as well. The tax credit should also cover entities providing services and duly registered with the provincial sales tax authorities.
It will provide the much-desired stimulus to the documentation of the economy, the KTBA added.
READ MORE: FBR invites income tax proposals for budget 2022/2023
-
Amendment sought in incentive to Greenfield industry
KARACHI: The Federal Board of Revenue (FBR) has been urged to amend provisions related to incentive to Greenfield industrial undertaking.
According to proposals for budget 2022/2023 presented by Karachi Tax Bar Association (KTBA), incentive had been defined under Section 2(27A) of Income Tax Ordinance, 2001 related to Greenfield industrial undertaking.
READ MORE: FBR invites Sales Tax proposals for budget 2022/2023
The definition of Greenfield was introduced by Finance Act, 2020 through introduction of section 2(27A). One of the conditions to qualify as a Greenfield Industrial undertaking is that it is using any process or technology that has not earlier been used in Pakistan and subjecting this with requirement to get approval from Pakistan Engineering Board.
READ MORE: FBR invites income tax proposals for budget 2022/2023
The tax bar said the incentive is though enshrined in the books yet it is not practically availed due to onerous requirement relating to novel technology.
The KTBA proposed to delete the condition relating to use of any process and technology not earlier used in Pakistan under this definition. “This condition is impracticable in an economy like Pakistan which in still in process of adopting new technology and has no research and development of its own to bring new technical expertise.”
READ MORE: Budget 2022/2023 to be presented in first week of June
Abolishing this requirement would create opportunities for local businessmen to acquire technology from developed world and lay foundation for industry and manufacturing.
This can also result in import substitution which is much needed for our country, the tax bar suggested.
READ MORE: MoC invites tariff proposals for budget 2022/2023
-
Pakistan’s foreign exchange reserves fall to $21.44 billion
KARACHI: Pakistan’s foreign exchange reserves have declined by $843 million to $21.44 billion by week ended March 18, 2022, State Bank of Pakistan (SBP) said on Thursday.
The foreign exchange reserves of the country were $22.283 billion a week ago i.e. March 11, 2022.
READ MORE: Pakistan’s forex reserves dip to $22.283 billion
The foreign exchange reserves are continuously falling since February 04, 2022. The country’s foreign exchange reserves have declined by around $2.28 billion during past six weeks till March 18, 2022. The foreign exchange reserves of the country have reached record high at $27.228 billion by week ended August 27, 2021.
READ MORE: SBP’s reserves slip by $250 million on foreign payments
The official foreign exchange reserves of the SBP fell by $869 million to $14.963 billion by March 18, 2022 as compared with $15.832 billion a week ago. The SBP attributed the decline in foreign exchange reserves to external payments.
READ MORE: Pakistan’s forex reserves decline to $22.875 billion
The foreign exchange reserves held by commercial banks witnessed a nominal increase of $24 million to $6.477 billion by week ended March 18, 2022 as compared with $6.453 billion a week ago.
READ MORE: Pakistan’s foreign exchange reserves dip to $23.226 bn
Miftah Ismail, Former Finance Minister, in a tweet said a $2.3 billion decrease in SBP foreign exchange reserves in six weeks. SBP reserves have come down from $17.3 billion on February 4 to $14.96 today.
-
SBP issues KIBOR rates on March 24, 2022
KARACHI: State Bank of Pakistan (SBP) on Thursday issued the Karachi Interbank Offered Rates (KIBOR) as of March 24, 2022.
Following are the latest KIBOR rates:
Tenor BID OFFER 1 – Week 9.89 10.39 2 – Week 10.03 10.53 1 – Month 10.70 11.20 3 – Month 11.71 11.96 6 – Month 12.22 12.47 9 – Month 12.23 12.73 1 – Year 12.27 12.77 -
Pakistan stocks gain 319 points amid volatile trading
KARACHI: Pakistan stocks gained 319 points on Thursday amid volatile trading observed during the day. The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 43,523 points from previous closing on March 22, 2022 at 43,204 points, up by 319 points.
READ MORE: Stocks witness range bound activity on rupee fall
Analysts at Arif Habib Limited said that volatile session was observed today due to uptick in the auction result of Market Treasury Bills.
The cut-off yields on 3-12 months T-bills stood higher compared to the longer-tenure papers like 3-10 years Pakistan Investment Bonds (PIBs).
Market opened in the green zone but battled between the bulls and bears throughout the day. Main board activity remained dull.
READ MORE: Pakistan stocks up 200 points on Reko Diq deal renewal
On the flip-side, activity continued to remain side-ways as market witnessed hefty volumes in the 3rd tier stocks. In the last trading hour, value buying was witnessed which led the index to close in the green zone.
Analysts at Topline Securities said that Pakistan equities witnessed a mix trend today where the benchmark index initially opened on a negative note due to news story regarding Pakistan’s officials are having tough time to convince IMF over recently announced PM amnesty scheme.
READ MORE: Weekly Review: political unrest to keep stocks under pressure
In the first half of trading session, the investors chose to do some profit taking due to which the KSE-100 index made an intraday low at 42,936 level (-268 points; down 0.62 per cent). However, value hunting resumed at the aforesaid level which helped market to record an intraday high at 43,570 level (+366 points; up 0.84 per cent) before settling at 43,523 level (+319 points; up 0.74 per cent) for the day.
Sectors contributing to the performance include Cement (+73.7 points), Technology (+53.1 points), Commercial Banks (+36.2 points), and Fertilizer (+33.5 points).
READ MORE: Pakistan stocks plunge 777 points on rupee devaluation
Volumes increased from 138.3 million shares to 149.8 million shares (+8.3 per cent DoD). Average traded value also increased by 12.7 per cent to reach US$ 31.0 million as against US$ 27.5 million.
Stocks that contributed significantly to the volumes include TREET, TRG, TELE, PAELR3 and TPLP.
-
Meezan Bank provides bill discounting facility for Huawei
KARACHI: Meezan Bank has successfully instituted an Islamic alternate to Inland Bill Discounting Facility for Huawei Technologies Pakistan (Pvt.) Limited – a first-of-its-kind transaction in Islamic banking industry, developed as a Shariah-compliant alternate to local bill discounting facility.
READ MORE: Meezan Bank lends Rs1 billion under youth scheme
The first drawdown under the facility was made against a deferred payment inland Letter of Credit (LC) opened by Pak Telecom Mobile Limited (Ufone) in favour of Huawei. The transaction has been developed by the Bank under the supervision and guidance of Dr. Muhammad Imran Ashraf Usmani – Vice Chairman Shariah Board, Meezan Bank, after a series of deliberations and persistent efforts.
READ MORE: Meezan Bank announces 26% growth in annual profit
On this occasion, Abdullah Ahmed – Group Head, Corporate & Institutional Banking, Meezan Bank stated: “Meezan Bank is pleased to offer yet another milestone solution for the Islamic banking industry i.e., a Shariah-compliant alternative to discounting of long tenor inland bills with provision of variable profit rates. We are hopeful that this solution will serve as a precedent for unique transactions pertaining to trade within telecom industry.”
READ MORE: Meezan Bank, Suzuki Motors sign MoU for car financing
Ahmed Ali Siddiqui – Group Head, Shariah Compliance, Meezan Bank, stated, “This endeavour of Meezan Bank displays its capability to develop out-of-the-box, innovative and Shariah-compliant solutions and reinforces its position as the leading Islamic bank of the country. We hope this solution will open a new chapter in facilitating trade among businesses and industries in a Shariah-compliant way and bring more businesses and trade into fold of Islamic banking.”
READ MORE: Meezan Bank starts Islamic financing scheme for SMEs
-
Dollar maintains record high against PKR at Rs181.73
KARACHI: The US dollar maintained the record high level of Rs181.73 on Thursday as Pakistan Rupee (PKR) ended unchanged in interbank foreign exchange market.
The greenback hit the record high level of Rs181.73 on March 22, 2022. The rupee ended at this level despite import pressure owing to the market opened after a day of holiday.
READ MORE: Rupee’s losing streak continues as dollar tops Rs181.73
Currency experts said that high import payments and widening of current account deficit kept the pressure on rupee value. Besides, the political uncertainty also added the pressure on exchange rate.
Furthermore, the dollar demand was also rising due to import of commodities related to the holy month of Ramzan. The local forex market is also uncertain due to volatile oil prices in the international markets.
READ MORE: Rupee collapses to dollar at record low Rs181.25
Further, the external payments, foreign exchange reserves declined and it pushed the rupee to fall sharply.
The foreign exchange reserves of the country fell by $386 million to $22.283 billion by the week ended March 11, 2022 as against $22.669 billion a week ago. The official reserves of the State Bank fell by $381 million to $15.831 billion by the week ended March 11, 2022 as compared with $16.212 billion a week ago.
READ MORE: Dollar continues to make historic high; hits Rs180.57
The country spent $11.69 billion for the import of petroleum products during the first seven months (July – February) 2021/2022 as compared with $5.64 billion in the corresponding period of the last fiscal year, showing an increase of 107 per cent.
READ MORE: Dollar climbs new peak PKR 180.07 at interbank closing