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Find top stories in this section. Pakistan Revenue brings you the latest and most important news from Pakistan and around the world, keeping you informed with key updates and insights.

Rupee slips sharply to dollar on PTI long march

KARACHI: Pakistani Rupee (PKR) slipped by sharp 95 paisas against the US dollar on Wednesday owing to unstable political situation after a long march announced by PTI Chief Imran Khan.

Exchange rate recorded 95 paisas decline in rupee value to end at PKR 220.68 from previous day’s closing of PKR 219.73 in the interbank foreign exchange market.

READ MORE: Rupee recovers to PKR 219.73 against dollar

Currency experts said that the market participants were in panic after expected political instability in the country.

PTI Chief Imran Khan a day earlier announced a country-wide protest with a long march towards the federal capital Islamabad. He announced the rally would begin from Friday October 28, 2022 for an indefinite period.

READ MORE: Dollar slips to PKR 220.41 on improved economic sentiments

PTI Chief Imran Khan was removed as prime minister through a vote of no confidence by the allied political parties in April this year. Imran Khan claimed that his government was toppled by a conspiracy.

Prior to the announcement of the long march, the rupee witnessed recovery against the greenback due to removal of Pakistan name from the grey list of the Financial Action Task Force (FATF).

Further, the sentiments were also improved due to commitment of Asian Development Bank (ADB) to finance the country. The ADB approved a financing of $1.5 billion to the country. Currency experts said that the approval of loan program by the ADB helped the rupee to make gain.

READ MORE: Rupee gains 11 paisas to dollar on ADB loan approval

The ADB in a statement on Friday said that it had approved $1.5 billion in financing to help the Government of Pakistan provide social protection, promote food security, and support employment for its people amid devastating floods and global supply chain disruptions.

Besides, the rupee was also supported by contraction in current account deficit during the first quarter of the current fiscal year.

Pakistan’s current account deficit has recorded a decline of 37 per cent to $2.21 billion during first quarter (July – September) of fiscal year 2022/2023, according to official data released last week.

The current account deficit of the country was $3.53 billion in the same quarter of the last fiscal year.

READ MORE: Dollar inches up to end at PKR 220.95 in interbank market

Contraction in current account deficit can be attributed to significant fall in trade deficit. The trade deficit also contracted by 21.32 per cent to $9.22 billion during first quarter of the current fiscal year as compared with the deficit of $11.72 billion in the same quarter of the last fiscal year.

Furthermore, the local currency also received support as the level of foreign exchange reserves were remained flat.

Pakistan’s weekly foreign exchange reserves increased nominally to $13.251 billion by week ended October 14, 2022 as compared with $13.247 billion a week ago i.e. October 7, 2022.

October 26, 2022
Last date extended for exchanging bearer prize bonds to June 30, 2023

ISLAMABAD: The federal government on Tuesday announced to extend the last date for exchanging / converting the bearer prize bonds up to June 30, 2023.

The bearer prize bonds with denominations of Rs40,000/-, Rs25,000/-, Rs15,000/ and Rs7,500 were expired on June 30, 2022. However, there is huge amount unclaimed against these bearer bonds and people complained for not providing sufficient time for exchanging the bonds.

READ MORE: Pakistan-issued prize bonds expire on June 30, 2022

The finance division through various notifications notified the date extension up to June 30, 2023 for the bearer prize bonds.

The finance ministry launched the withdrawal of the unregistered prize bonds in a phased manner. The federal government on June 24, 2019, announced to discontinue the circulation of Rs40,000 denomination national prize bonds. Similarly, on December 10, 2020, the government announced to discontinue the circulation of Rs25,000 denomination prize bonds. In April 2021, the finance ministry announced that national prize bonds of denominations Rs7,500 and Rs15,000 shall not be sold.

READ MORE: SBP directs banks to accept bearer prize bonds

Since June 2019 the government repeatedly extended the date for exchanging the bearer bonds. Previously, the last date for exchanging the unregistered bonds was December 31, 2021.

The government is aiming to document the bearer bonds so the exchanging the unregistered bond with cash has been prohibited. The ministry of finance issued various procedure to convert the bond without exchanging with the cash.

READ MORE: Prize bond (bearer) holders given 3 months to document

The bonds can be converted to premium prize bonds (registered) of denomination of Rs25,000 and Rs40,000 (subject to the adjustment of differential amount) through 16 field offices of State Bank of Pakistan (SBP) Banking Services Corporation (BSC), and branches of six commercial banks i.e. National Bank of Pakistan, Habib Bank Limited, United Bank Limited, MCB Bank Limited, Allied Bank Limited, and Bank Alfalah Limited.

READ MORE: History of Prize Bonds in Pakistan

The bonds can be replaced with Special Saving Certificates/Defence Saving Certificates through the 16 field offices of SBP Banking Services Corporation, authorized commercial banks, and the National Savings Center.

The bonds will only be encashed by transferring the proceeds to the bonds holder’s bank account through the 16 field offices of SBP BSC as well as the authorized commercial bank branches and to the Saving Accounts at National Savings Centers.

October 25, 2022
Prime Minister Shehbaz arrives Saudi Arabia to attend FII Summit

RIYADH: Prime Minister Shehbaz Sharif on Monday arrived Riyadh, Saudi Arabia on a two-day visit to attend the Future Investment Initiative (FII) Summit being held from October 25-27, 2022.

The prime minister is visiting the Kingdom at the invitation of Saudi Crown Prince Mohammed Bin Salman bin Abdulaziz.

At the airport, the Governor of Riyadh Faisal bin Bandar bin Abdulaziz Al Saud received the prime minister who was accompanied by a delegation comprising the federal ministers.

READ MORE: Prime Minister Shehbaz wishes Hindu community on Diwali

During his stay in Riyadh, the prime minister will hold consultations with the Saudi Crown Prince to review the longstanding fraternal relations, with a view to further strengthening the multifaceted cooperation, especially in the economic field, according to the Foreign Office.

Prior to his departure, the prime minister in a series of tweets said the present state of the global economy needed “new thinking and bold vision to overcome the irritants and forge new paths”.

“The pandemic and climate-induced disasters have already put immense strains on the developing countries,” he said, adding that it was high time the world explored solutions to the deepening challenges through candid dialogue.

The FII summit will convene the world’s foremost CEOs, policymakers, investors, entrepreneurs, and young leaders to shape the future of international investment and the global economy.

The event will include in-depth conversations about new pathways for global investment; analysis of critical industry trends; and unparalleled networking among CEOs, world leaders, and experts.

October 25, 2022
No audit of IT sector due to fixed tax regime: FBR chairman

ISLAMABAD: Asim Ahmad, Chairman, Federal Board of Revenue (FBR) on Monday said there is no audit of the IT sector due to fixed tax regime.

There is no audit of IT sector export-oriented companies through budgetary measures in the current financial year for ensuring ease of doing business and reducing the cost of tax compliance.

READ MORE: Electricity withholding tax not applicable on ATL domestic consumers

“As fixed and final tax regime has been introduced in this fiscal year therefore, no tax or audit notices will be sent to the IT sector professionals and easier documentation will be the priority,” FBR chairman said.

Special Assistant to the Prime Minister on youth affairs Miss Shaza Fatima and the Prime Minister’s task force on Information technology and Telecom sector, convened a meeting in the Prime Minister’s office to discuss IT sector exports taxation issues and the impact thereof particularly of small and medium IT companies and software houses, with Chairman FBR Asim Ahmad, officials of the Ministry of IT and representatives of PASHA.

READ MORE: Tax rates on goods, passenger transport vehicles during 2022-2023

The Prime Minister Mian Shehbaz Shareef constituted a task force to devise ways to increase the Information Technology exports by $3 billion till 2023.

On the note of exemption from the proposed 0.25 per cent tax, this will remain and it is a quarter of what the other exporters pay.

In the Final Tax Regime, the Federal Board of Revenue has agreed in principle to resolve sales tax registration and return filing issues.

READ MORE: FBR notifies tax rates on brokerage, commission during 2022-2023

The definitions of IT in the June 2022 Finance Act were deliberated upon, and found to be all inclusive. The Federal Board of Revenue has also agreed in principle to propose necessary changes in law for all IT exports to attain the benefit of final tax regime.

In principle the FBR agreed upon the proposal that if the Provincial consensus is reached, Federal Excise Duty (FED) can be reduced from 19.5 per cent to 17 per cent for Telecom sector.

The funds received by the IT sector through applications like Payoneer etc. will be given the benefit of final tax regime through necessary changes in the law, if required.

READ MORE: Non-ATL to pay 200% more tax on motor vehicle purchase during 2022-2023

October 24, 2022
Electricity withholding tax not applicable on ATL domestic consumers

Domestic consumers of electricity are not subject to withholding income tax if their names are in the Active Taxpayers List (ATL).

The Federal Board of Revenue (FBR) has issued updated withholding tax card 2022-2023 after incorporating amendments made through Finance Act, 2022 to the Income Tax Ordinance, 2001.

READ MORE: Tax rates on goods, passenger transport vehicles during 2022-2023

The FBR collects withholding tax on the electricity consumption under Section 235 of the Income Tax Ordinance, 2001.

Following are the withholding tax rates and text of the Section 235:

WITHHOLDING TAX RATES ON ELECTRICITY

For commercial and industrial consumers:

1. There will be no tax on gross amount of bill up to Rs500

2. The rate of withholding tax shall be Rs10 per cent of the amount where gross amount of bill exceeds Rs500 but does not exceed Rs20,000.

READ MORE: FBR notifies tax rates on brokerage, commission during 2022-2023

3. The tax shall be Rs1950 plus 12 per cent of the amount exceeding Rs20,000 for commercial consumers. Rs1,950 plus 5 per cent of amount exceeding Rs20,000 for industrial consumers where gross amount of bill exceeds Rs20,000.

For domestic consumers: (The tax is applicable on person not appearing on ATL)

The rate of tax to be collected on domestic electricity consumption shall be: (i) zero percent the amount of monthly bill is less than Rs. 25,000; and (ii) 7.5 per cent if the amount of monthly bill is Rs. 25,000 or more.

READ MORE: Non-ATL to pay 200% more tax on motor vehicle purchase during 2022-2023

Section 235. Electricity consumption

(1) There shall be collected advance tax at the rates specified in Division IV of Part-IV of the First Schedule on the amount of electricity bill of a commercial or industrial or domestic consumer:

Provided that the provisions of sub-section (1) shall not apply to a domestic consumer of electricity if his name appears on the Active Taxpayers’ List.

(1A) In addition to tax collectible under sub-section (1), there shall be collected tax at the rates given in the Division IV of Part IV of First Schedule from retailers and service providers as provided under section 99A of the Ordinance:

Provided that the tax shall not be collectible under this sub-section if the tax has been collected from the person under sub-section (9) of section 3 of the Sales Tax Act, 1990 as provided in the general order issued under section 99A of the Ordinance.

READ MORE: FBR notifies tax rates on prize bond, lottery winning during 2022-2023

(2) The person preparing electricity consumption bill shall charge advance tax under sub-section (1) in the manner electricity consumption charges are charged.

Explanation.— For removal of doubt, it is clarified that for the purposes of this section electricity consumption bill referred to in sub-section (2) means electricity bill inclusive of sales tax and all incidental charges.

(3) Advance tax under this section shall not be collected from a person who produces a certificate from the Commissioner that his income during tax year is exempt from tax or that he has discharged advance tax liability under section 147 or whose entire income is subject to final tax regime or minimum tax regime under any provisions of this Ordinance other than this section.

READ MORE: Tax rates for rental income from immovable property during 2022-2023

(4) Under this section, —

(a) in the case of a taxpayer other than a company, tax collected upto bill amount of three hundred and sixty thousand Rupees per annum shall be treated as minimum tax on the income of such persons and no refund shall be allowed;

(b) in the case of a taxpayer other than a company, tax collected on monthly bill over and above thirty thousand rupees per month shall be adjustable; and

(c) in the case of a company, tax collected shall be adjustable against tax liability.

October 24, 2022
Prime Minister Shehbaz wishes Hindu community on Diwali

ISLAMABAD: Prime Minister Shehbaz Sharif on Monday whished the Hindu community in the country on their festive occasion of Diwali.

“Wishing the Hindu community in Pakistan and around the world on Diwali, the festival of lights,” the prime minister said in a tweet.

The prime minister wished for Diwali to become a source of peace and happiness for all.

Hindus across the globe and in Pakistan are celebrating the occasion of Diwali that celebrates the triumph of light over dark and good over evil.

The Constitution of Pakistan gives equal opportunities to minorities to freely practice their religion and celebrate their occasions.

October 24, 2022

Non-ATL to pay 200% more tax on motor vehicle purchase during 2022-2023

Persons not on Active Taxpayers List (ATL) are required to pay 200 per cent more withholding tax for purchasing motor vehicles during 2022-2023.

Federal Board of Revenue (FBR) issued withholding tax card 2022-2023 after incorporating changes made through Finance Act, 2022 to the Income Tax Ordinance, 2001.

According to the withholding tax card 2022-2023, the tax authorities have increased burden on the persons not on the Active Taxpayers List (ATL).

Following are the withholding tax rate on purchase of motor vehicles or registration:

Sr. No.	Engine Capacity	ATL	Non-ATL
1.	Upto 850 CC	Rs10,000	Rs30,000
2.	851 CC to 1000 CC	Rs20,000	Rs60,000
3.	1001 CC to 1300 CC	Rs25,000	Rs75,000
4.	1301 CC to 1600 CC	Rs50,000	Rs150,000
5.	1601 CC to 1800 CC	Rs150,000	Rs450,000
6.	1801 CC to 2000 CC	Rs200,000	Rs600,000
7.	2001 CC to 2500 CC	Rs300,000	Rs900,000
8.	2501 CC to 3000 CC	Rs400,000	Rs1,200,000
9.	Above 3000 CC	Rs500,000	Rs1,500,000

Provided that in cases where engine capacity is not applicable and the value of vehicle is Rupees five million or more, the rate of tax collectible shall be 3 per cent of the import value as increased by customs duty, sales tax and federal excise duty in case of imported vehicles or invoice value in case of locally manufactured assembled vehicles.

Following are the withholding tax rates at the time of transfer of registration to be collected by provincial excise and taxation department.

Sr. No.	Engine Capacity	ATL	Non-ATL
1.	Upto 850 CC	Nil	Nil
2.	851 CC to 1000 CC	Rs5,000	Rs15,000
3.	1001 CC to 1300 CC	Rs7,500	Rs22,500
4.	1301 CC to 1600 CC	Rs12,500	Rs37,500
5.	1601 CC to 1800 CC	Rs18,750	Rs56,250
6.	1801 CC to 2000 CC	Rs25,000	Rs75,000
7.	2001 CC to 2500 CC	Rs37,500	Rs112,500
8.	2501 CC to 3000 CC	Rs50,000	Rs150,000
9.	Above 3000 CC	Rs62,500	Rs187,500

Provided that where the engine capacity is not applicable and value of rupee is five million or more, the rate of tax collectable shall be rupee twenty thousand.

Provided further that the rate of tax to be collected under this clause shall be reduced by ten per cent each year from the date of first registration in Pakistan.

Following the withholding tax rates to be collected by every motor vehicle registration authority of Excise and Taxation Department at the time of registration, if the locally manufactured motor vehicle has been sold prior to registration by the person who originally purchased it from the local manufacturer.

Sr. No.	Engine Capacity	ATL	Non-ATL
1.	Upto 1000 CC	Rs100,000	Rs300,000
2.	1001 CC to 2000 CC	Rs200,000	Rs600,000
3.	2001 CC and above	Rs400,000	Rs1,200,000

October 23, 2022

FTO directs country-wide crackdown against smuggled vehicles

ISLAMABAD: The Federal Tax Ombudsman (FTO) has directed tax authorities to launch country-wide crackdown against smuggled vehicles.
(more…)

October 22, 2022
Foreign direct investment in Pakistan plunges by 47% in 1QFY23

Foreign Direct Investment (FDI) into Pakistan has plunged by 47 per cent during first quarter (July – September) 2022/2023, according to data released by State Bank of Pakistan (SBP).

The central bank said that the FDI fell to $253 million during the first quarter of the current fiscal year as compared with $479 million in the corresponding quarter of the last fiscal year.

READ MORE: FATF removes Pakistan from grey list

The inflows under the FDI recorded 31.7 per cent decline to $395 million during the quarter under review as compared with $579 million in the same quarter of the last year.

On the other hand, the outflow under the FDI significantly increased by 42.5 per cent to $142 million during July – September 2022/2023 as compared with $99.6 million in the same period of the last fiscal year.

READ MORE: Asian Bank approves $1.5 billion to finance Pakistan

The total foreign private investment into the country fell by 36.3 per cent to $241.3 million during the quarter under review when compared with $379 million in the corresponding quarter of the last fiscal year.

The portfolio investment in the capital market registered massive decline in outflow during the quarter under review. The outflow of portfolio investment recorded $12.1 million during the first quarter of the current fiscal year as compared with the outflow of $100.5 million in the same quarter of the last year.

READ MORE: Pakistan’s weekly forex reserves increase nominally

The foreign public investment under the head of debt securities recorded an outflow of $18.2 million during the first quarter of the fiscal year 2022/2023 as compare with inflow of $980 million in the same quarter of the last fiscal year.

The total foreign investment including private and public recorded a decline of 83.6 per cent to $223 million during the first quarter of the current fiscal year as compared with $1.36 billion in the same quarter of the last fiscal year.

READ MORE: Current account deficit declines by 37% to $2.21 billion in first quarter

October 22, 2022
FATF removes Pakistan from grey list

Financial Action Task Force (FATF) on Friday decided to remove Pakistan from grey list after the country made compliance with the conditions.

FATF is the world’s money laundering and terror-financing watchdog. It said that Pakistan has been removed from the grey list and is no longer subject to its increased monitoring process.

The Paris-based inter-governmental body had put Pakistan on its grey list of untrustworthy jurisdictions in June 2018 because of “strategic counter-terrorist financing-related deficiencies.”

Plenary meeting of the FATF ended and made decision regarding Pakistan.

Earlier, Analysts at Arif Habib Limited said: “We expect Pakistan to be taken off the grey list by the FATF amid the progress Pakistan has made so far against money laundering and terrorist financing (AML/CFT) in the past few years.”

To recall, Pakistan was placed on FATF’s Grey List in June 2018 whereby it was found non-compliant with recommendations of the FATF which targeted areas of risk assessment, national cooperation, targeted sanctions, preventative measures, due diligence, internal and third party controls, law enforcement, regulation and supervision for money laundering and terror financing, amongst others.

Skip forward to 2022, the FATF Plenary in June, under the German Presidency of Dr. Marcus Pleyer, acknowledged the progress Pakistan made against money laundering and terrorist financing (AML/CFT) with all 34 action points implemented.

Through various bills and amendments, the Pakistani authorities had diligently worked to satisfy the FATF. These related to laws against money laundering, freezing of assets and filing of cases against proscribed organizations, actions against terror financing etc.

However, final decision to take Pakistan off the grey list was conditional upon successful on-site visit of FATF. FATF team conducted on-site visit to Pakistan few weeks back, with a purpose of inspecting the legal, regulatory and operational reforms and procedures implemented for compliance.

The analysts said that following the exit from the list, Pakistan will still be required to work with the APG (its relevant regional bodies) in the regular course of the follow-up process to make further improvements in its AML & CFT framework, as and when required.

Having already suffered direct consequences and economic difficulties from its time on the grey list, the climactic graduation of Pakistan from the grey list will come no less than a breath of fresh air. It will be a major relief and accomplishment for Pakistan, and is expected to reap benefits in both, short and long run.

The immediate ramification of exiting grey list carries reputational implication for Pakistan, we believe. This positive development bodes well for Pakistan’s image which was recently further dented by the downgrading of rating by International Credit Rating agencies like Moodys.

With the international community—investors in particular, the removal from grey list is likely to strengthen Pakistan’s position especially with regards to the soundness of our financial systems and help regain their confidence.

Markets are expected to react positively to this news and overall sentiment is likely to remain upbeat for a while. Moreover, going forward, this should also help strengthen Pakistan’s case of re-rating and upgrading by the International Credit Rating agencies.

In addition, one of the structural benchmarks laid down by the IMF for Pakistan stated ‘Adoption of measures to strengthen the effectiveness of the AML/CFT framework to support the country’s efforts to exit the Financial Action Task Force (FATF) list of jurisdictions with serious deficiencies.’ This means, Pakistan complies with one more structural benchmark of the IMF, paving way for successful ninth review which is due in November 2022 enabling disbursement of SDR 894 million from the Fund.

October 21, 2022