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  • Pakistan remittances decline by 15.7% in October 2022

    Pakistan remittances decline by 15.7% in October 2022

    KARACHI: Inflow of workers remittances has declined by 15.7 per cent in the month of October 2022 when compared with the same month of the last year, according to data released by State Bank of Pakistan (SBP) on Friday.

    READ MORE: Home remittances decline to $7.68 billion in 1QFY23

    The inflows of home remittances fell to $2.215 billion in October 2022 when compared with $2.628 billion in the same month of the last year.

    The remittances in October 2022 also witnessed a fall of 9 per cent when compared with $2.437 billion received during the month of September 2022.

    READ MORE: Pakistan remittances from Saudi Arabia fall by 7.5% in two months

    Remittances inflows during October 2022 were mainly sourced from Saudi Arabia ($570.5 million), the United Arab Emirates ($427 million), the United Kingdom ($278.8 million) and the United States of America ($253.1 million).

    The cumulative inflow declined by 8.6 per cent to $9.9 billion during first four months of the current fiscal year.

    READ MORE: State Bank signs deal to analyze property prices

    The inflow of remittances has been recorded at $9.9 billion during July – October of current fiscal year 2022/2023 as compared with $10.83 billion in the corresponding period of the last fiscal year.

    READ MORE: SBP bars banks from taking service charges on flood donations

  • PKR slips to dollar as foreign exchange reserves fall sharply

    PKR slips to dollar as foreign exchange reserves fall sharply

    KARACHI: Pakistani Rupee (PKR) slipped against the US dollar on Friday owing to massive decline in foreign exchange reserves of the country.

    The exchange rate witnessed a decline of 22 paisas in rupee value to end at PKR 221.64 to the dollar from previous day’s closing of PKR 221.42 in interbank foreign exchange market.

    READ MORE: Rupee makes recovery as limit imposed on dollar cash movement

    Currency experts said that the devaluation in rupee value came after significant decline in foreign exchange reserves was recorded.

    Pakistan foreign exchange reserves slipped sharply by $958 million by week ended November 08, 2022 owing to external payments, State Bank of Pakistan (SBP) said a day earlier.

    The foreign exchange reserves of the country have been recorded at $13.721 billion by week ended November 04, 2022 as compared with $14.679 billion a week ago i.e. October 28, 2022.

    The country’s foreign exchange reserves hit all-time high of $27.228 billion on August 27, 2021. Since then the foreign exchange reserves have declined by $13.507 billion.

    READ MORE: PKR ends stable against US dollar in interbank

    The official foreign exchange reserves of the State Bank plunged by $958 million to $7.957 billion by week ended November 04, 2022 as compared with $8.913 billion a week ago.

    The SBP attributed the decline to external debt servicing. “Major external debt repayments executed during the week includes repayment of government commercial loans. Refinancing of these loans is in process which will improve foreign exchange reserves in coming weeks,” the central bank added.

    The foreign exchange reserves held by the central bank witnessed a record high at $20.146 billion by week ended August 27, 2021. Since then the official reserves of the SBP dropped by $12.189 billion.

    The central bank has taken various measures to monitor outflow of the foreign currency in order to stabilize the rupee value.

    Currency experts said that the latest measures of the government to limit the cash dollar taking out of Pakistan supported the local currency to make gain.

    READ MORE: SBP limits cash up to USD 5,000 taking out of Pakistan

    On November 08, 2022, the SBP issued a circular to restrict the amount of foreign currency in cash up to equivalent to USD 5,000 from USD 10,000.

    The central bank issued a circular stating that it had reviewed the existing foreign currency cash carrying limits for travel purposes, and decided to further rationalize the same.

    As per the revised limits individuals with age 18 years and above (adults) can now take out of Pakistan foreign currency (FCY) equivalent to USD5,000 per visit, while those below the age of 18 years (minors) can carry out foreign currency equivalent to USD2,500 per visit. Further, the annual ceiling to take out FCY for adults and minors shall be USD30,000 and USD15,000, respectively.

    READ MORE: US Dollar falls by 26 paisas to PKR 221.66 in interbank market

  • Pakistan banks may issue corporate cards for cross-border commercial payments

    Pakistan banks may issue corporate cards for cross-border commercial payments

    KARACHI: State Bank of Pakistan (SBP) has allowed banks to issue corporate cards to their business customers for making cross-border commercial payments.

    The SBP through a circular dated November 08, 2022 issued to presidents and chief executives of authorized dealers (ADs) in foreign exchange said that banks desirous to facilitate their business customers may issue corporate cards, to be used strictly in accordance with the applicable provisions of the Foreign Exchange Manual and the profile of the customer. “ADs shall institute a robust mechanism to monitor the payments through such corporate cards,” the SBP added.

    READ MORE: State Bank, NBP to withdraw petitions in Riba case: Ishaq Dar

    According the circular the central bank had observed individuals were using their debit/credit cards for cross-border transactions, which are of commercial nature and are not aligned with their personal needs as well as their risk profile.

    In order to ensure judicious use of cards, including virtual cards, it has been decided to place an annual limit of $30,000 per individual on card based cross-border transactions. For the purpose of this circular, the year will start from November 1, 2022, however, limit for the current year will be calculated from the date of issuance of this circular. This limit would be applicable for an individual across the banking industry.

    READ MORE: State Bank launches environment, social risk management manual

    The SBP advised the banks to conduct proper due diligence of the individual customers at the time of their onboarding/ update of risk profiles and duly incorporate their cross-border payment needs through cards in their profiles.

    Banks are also directed to ensure that issuance of multiple cards to a single customer are commensurate with their risk profile and are monitored collectively. Further, banks should only allow those card based cross-border transactions, which are in-sync with the personal needs of the customers and have no commercial purpose.

    READ MORE: SBP limits cash up to USD 5,000 taking out of Pakistan

    Although, it is the primary responsibility of a customer to ensure that his/ her annual limit is not breached at any time, ADs shall institute a mechanism of ongoing monitoring whereby card based cross-border payments by individuals through single/multiple cards are only allowed in accordance with the limit prescribed above and as per the risk profile of the customer.

    Besides, ADs are advised to run an awareness campaign to inform their customers about the contents of this circular and the fact that cross-border commercial payments through cards issued to individuals are not permissible.

    READ MORE: SBP, FIA jointly take action against illegal exchange companies

    ADs are advised to ensure meticulous compliance of these instructions and bring the same to the notice of all their constituents. Any non-compliance of above instructions may be dealt with under relevant provisions of the Foreign Exchange Regulation Act, 1947 and any pecuniary or administrative action, as deemed necessary, may be initiated against the delinquent ADs.

  • Pakistan FX reserves slip sharply by $958 mn on external payments

    Pakistan FX reserves slip sharply by $958 mn on external payments

    KARACHI: Pakistan foreign exchange reserves slipped sharply by $958 million by week ended November 08, 2022 owing to external payments, State Bank of Pakistan (SBP) said on Thursday.

    The foreign exchange reserves of the country have been recorded at $13.721 billion by week ended November 04, 2022 as compared with $14.679 billion a week ago i.e. October 28, 2022.

    READ MORE: Pakistan FX reserves rise to $14.69 billion after ADB transfer

    The country’s foreign exchange reserves hit all-time high of $27.228 billion on August 27, 2021. Since then the foreign exchange reserves have declined by $13.507 billion.

    The official foreign exchange reserves of the State Bank plunged by $958 million to $7.957 billion by week ended November 04, 2022 as compared with $8.913 billion a week ago.

    READ MORE: SBP’s weekly forex reserves dip by $157 million to $7.44 billion

    The SBP attributed the decline to external debt servicing. “Major external debt repayments executed during the week includes repayment of government commercial loans. Refinancing of these loans is in process which will improve foreign exchange reserves in coming weeks,” the central bank added.

    The foreign exchange reserves held by the central bank witnessed a record high at $20.146 billion by week ended August 27, 2021. Since then the official reserves of the SBP dropped by $12.189 billion.

    READ MORE: Pakistan’s weekly forex reserves increase nominally

    It is pertinent to mention that the SBP’s reserves witnessed sizeable increase a week ago after the Asian Development Bank (ADB) released the fund amounting $1.5 billion to Pakistan on October 26, 2022.

    The foreign exchange reserves held by commercial banks flat at $5.764 billion by week ended November 04, 2022 when compared with $5.766 billion a week ago.

    READ MORE: Pakistan’s forex reserves continue to fall; deplete to $13.25 billion

  • State Bank, NBP to withdraw petitions in Riba case: Ishaq Dar

    State Bank, NBP to withdraw petitions in Riba case: Ishaq Dar

    ISLAMABAD: Finance Minister Senator Muhammed Ishaq Dar Wednesday said that State Bank of Pakistan (SBP) and National Bank of Pakistan (NBP) will withdraw their petitions from the Supreme Court of Pakistan against the judgment of Federal Shariat Court in which the Court had ordered implementation of interest-free (Riba free) banking system in the country.

    READ MORE: KCCI demands implementation of Riba free banking

    He said that in this regard he held several meetings and detailed discussions with the SBP Governor and under the special directives of Prime Minister, it was decided that both the SBP and NBP would withdraw their petitions against the decision.

    He said that the government would also expedite its efforts to introduce Shariah compliant banking system in the country for rapid growth and promotion of Islamic bank and finance.

    READ MORE: SBP seeks Supreme Court guidance on Riba case judgement

    He further informed that during 2013-2018 several steps were being taken to promote Islamic economic system and a special committee comprising on Islamic scholars were also formed, adding that Islamic Banking system also observed significant growth and progress at that time.

    READ MORE: IPS demands implementation of court judgment on Riba

    However, he said that from last few years the sector was completely neglected and no further progress was witnessed, adding that promotion of Islamic economic system and interest free banking was the top priority of incumbent government

    He said that government was also determined to overcome all the challenges faced for introducing interest free banking system and it will take all possible measures to take forward the interest free banking and economy for the prosperity of nation.

    READ MORE: Court judgment: Riba is Haram in any form

  • SBP limits cash up to USD 5,000 taking out of Pakistan

    SBP limits cash up to USD 5,000 taking out of Pakistan

    KARACHI: State Bank of Pakistan (SBP) on Tuesday restricted the amount of foreign currency in cash up to equivalent to USD 5,000 from USD 10,000.

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  • Some car assemblers, manufacturers may exit Pakistan

    Some car assemblers, manufacturers may exit Pakistan

    KARACHI: Some car assemblers/manufacturers may exit Pakistan market because the automotive industry is facing immense difficulties.

    Indus Motors in a management briefing informed that automobile sector faces unforeseen external challenges due to unprecedented rupee devaluation and import restrictions by SBP. “That said, some players may exit from the market,” according to Topline Securities quoted as saying.

    READ MORE: Pakistan car sales plunge 50% in 1QFY23

    Indus Motors (INDU) conducted its Corporate Briefing Session (CBS) today to discuss the first quarter of the current fiscal year financial results and company outlook.

    INDU is currently running at production capacity of 40-50 per cent due to SBP restrictions and management don’t see restriction to ease soon.

    At current production level, INDU’s order book is filled for next 3 months. The orders can be delivered in 4-5 weeks if restriction eases.

    READ MORE: Pakistan car sales plummet by 50% on import restriction

    Furthermore, floods wreaking havoc along with higher inflation and low purchasing power of consumers will have a negative impact on demand of the entire auto sector in upcoming periods.

    The auto financing is down from 35 per cent to just 10 per cent due to higher interest rates and reduction in financing tenure.

    Management informed that localization rate in value terms for Yaris and Corolla is 65 per cent after deduction of 39 per cent taxes and duties.

    READ MORE: Pakistan car sales drop 59% in July 2022

    With regards to recently announced refund policy, management informed that around 400-500 clients cancelled their booking and got their cash back along with interest amount.

    Investment plan of US$100mn for local production of HEV vehicles is on track; where company is expected to launch its variant by end of next year in 2023.

    Pakistan car sales down 51 per cent YoY to 47,178 units in 1QFY23 out of which INDU car sales clocked in at 8,994 units, down 52 per cent YoY. Used car imports clocked in at 1,039 units in 1QFY23.

    READ MORE: Pakistan car sales surge 54 per cent in FY22

    Net sales in 1QFY23 down 43 per cent to Rs37bn from Rs66bn in 1QFY22 due to lower production on account of limited imports allowed by SBP thereby forcing the company to observe regular shutdowns during the quarter. Similarly profit after tax also down by 76 per cent YoY to Rs1.3bn from Rs5.4bn primarily due to gross loss.

    INDU recorded gross loss of 6 per cent in 1QFY23 compared to gross profit of 11 per cent in 1QFY22 due to rupee devaluation against US dollar, increased freight charges and higher commodity prices. The management indicated the there would also be loss in 2QFY23 however the quantum would be lower compared to 1QFY23.

  • SBP, FIA jointly take action against illegal exchange companies

    SBP, FIA jointly take action against illegal exchange companies

    KARACHI: State Bank of Pakistan (SBP) and Federal Investigation Agency (FIA) have decided to jointly take action against illegal exchange companies.

    A statement issued on Tuesday stated that a high-level meeting was held between the SBP governor and the Director General, FIA on November 8, 2022.

    READ MORE: US Dollar falls by 26 paisas to PKR 221.66 in interbank market

    The meeting took stock of illicit foreign exchange activities and chalked out a comprehensive plan of action against illegal foreign exchange businesses being carried out in the country.

    It was agreed during the meeting that concerted joint effort is required to apprehend and implicate the illegal foreign exchange operators and speculators across the country.

    READ MORE: Faysal Bank enables donations through WhatsApp

    Accordingly, SBP and FIA have jointly initiated action against illegal foreign exchange operators in Pakistan. To this effect, joint teams from SBP and FIA shall identify and take penal/legal action against the perpetrators so as to curb speculation and the grey market.

    The teams, while remaining within the legal mandate allowed to them by the relevant laws, would crack down on all illegal foreign exchange operators and businesses across Pakistan.

    READ MORE: Pakistan should ban trade in cash dollars: forex association

    Banks and Exchange Companies are authorized by the SBP to carry out Foreign Exchange business in Pakistan. Involvement of any person or entity, other than banks and Exchange Companies, in foreign exchange business is illegal under the Foreign Exchange Regulation Act, 1947.

    The illegal foreign exchange business also adversely affects the open market exchange rate and increases the gap between the interbank and open market exchange rate.

    READ MORE: Pakistan, China sign agreement for RMB clearance

  • FBR directs intensified enforcement to meet collection target

    FBR directs intensified enforcement to meet collection target

    KARACHI: Asim Ahmad, Chairman, Federal Board of Revenue (FBR) has directed tax offices to intensified enforcement measures to meet tax collection targets set for current fiscal year.

    According a statement issued on Monday, the chairman directed all Chief Commissioners of Inland Revenue (CCIRs) that all out efforts must be taken to safeguard revenue and to meet the budgetary target fixed for financial year 2022-2023 through intensified enforcement measures.

    READ MORE: FBR approves setting up directorate for risk profiling of main sectors

    The FBR chairman visited Karachi and remained in the city for three days. He chaired chief commissioners’ conference of eight field formations of Sindh and Balochistan held at Large Taxpayers’ Office (LTO) Karachi. Member Inland Revenue (Operations) Amjad Zubair Tiwana also accompanied the FBR chairman.

    Detailed presentations regarding revenue collections for and up to month of October were given by all chief commissioners, further outlining the strategy for achievement of budgetary targets for November and the rest of financial year 2022-2023.

    READ MORE: National Tax Council discusses GST harmonization

    The CCIR’s gave workable strategy and new avenues for achieving the revenue target for the current financial year.

    The chairman also held a meeting with Karachi Tax Bar Association (KTBA). Rehan Jafri, KTBA President along with other members of the tax bar were present.

    The tax bar raised operational and technical issues regarding Iris software relating to filing of returns.

    The FBR chairman assured the bar of early resolution of the issue as highlighted. The chairman also expressed that bar and bench together are the cornerstone for smooth functioning of taxation system and also acknowledged efforts of KTBA in this regard.

    READ MORE: Definitions under Pakistan Income Tax Laws updated up to June 30, 2022

    The chairman also visited KCCI and appreciated the contribution of the business community in achievement of budgetary target up to October, 2022. Zubair Motiwala and other members of the chamber raised various return-related issues and customs duties. Asim Ahmad assured them of early resolution of the issues.

    Later, FBR chairman visited Federation of Pakistan Chambers of Commerce and Industry (FPCCI) and met the officer bearers of the apex trade body.

    READ MORE: No tax amnesty, no tax rate cut under IMF program: FBR chief

    Issues regarding issuance of refunds and taxes levied on assets were discussed. The chairman assured the FPCCI of speedy issuance of refunds. Regarding, tax on assets, the chairman stated that the same was a revenue measure which is subjudice before the superiod courts.

  • National Tax Council discusses GST harmonization

    National Tax Council discusses GST harmonization

    ISLAMABAD: National Tax Council on Monday discussed the harmonization of General Sales Tax (GST) in the country.

    Federal Minister for Finance and Revenue Senator Mohammad Ishaq Dar chaired a meeting on National Tax Council at Finance Division.

    READ MORE: Definitions under Pakistan Income Tax Laws updated up to June 30, 2022

    Finance Minister Punjab Mr. Muhammad Mohsin Leghari, Minister of State for Finance and Revenue Dr. Aisha Ghous Pasha, SAPM on Finance Tariq Bajwa, SAPM on Revenue Tariq Mehmood Pasha, Secretary Finance, Chairman Federal Board of Revenue (FBR), Provincial Finance Secretaries and other senior officers of Finance Division attended the meeting.

    READ MORE: Sindh exempts sales tax on services provides for floods relief by customs agents, port operators

    The meeting reviewed the progress on the decisions of the last meetings of the NTC on harmonization of GST across the country.

    The Finance Minister shared that in order to have ease of doing business, harmonization of GST is important. Further, GST harmonization will be a major step towards completion of policy actions under World Bank’s RISE program.

    READ MORE: No tax amnesty, no tax rate cut under IMF program: FBR chief

    The participants shared their opinions on the harmonization of GST. Chairman FBR and provincial stakeholders extended their consensus to proceed ahead in the spirit of greater national interest for harmonization of GST under the umbrella of National Tax Council (NTC).

    In conclusion, Finance Minister Senator Ishaq Dar appreciated the stakeholders for building consensus and settlement of the decision regarding harmonization of GST for ease of doing business.

    READ MORE: FBR may withdraw condition of invoice, packing list in containers