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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.
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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
Asian Bank approves $1.5 billion to finance Pakistan

Asian Development Bank (ADB) has approved $1.5 billion in financing to help Pakistan provide social protection, promote food security, and support employment for its people amid devastating floods and global supply chain disruptions.

In a statement issued on Friday, the ADB said the loan, provided under ADB’s Building Resilience with Active Countercyclical Expenditures (BRACE) Program, will help fund the government’s $2.3 billion countercyclical development expenditure program designed to cushion the impacts of external shocks, including the Russian invasion of Ukraine.

“Pakistan’s recovery from the COVID-19 pandemic has been impeded by external shocks,” said ADB Director General for Central and West Asia Yevgeniy Zhukov.

“Increasing business costs and rising living expenses are affecting millions of Pakistanis, especially the poor and vulnerable. ADB’s program will help the government manage the impacts of high prices, increasing food insecurity, slowing business activity, and reducing income for vulnerable groups, many of whom are also reeling from the devastating floods.”

ADB’s financing will provide the fiscal space needed for the government to implement its countercyclical development expenditure package, which is designed to target the poorest families in Pakistan who are often disproportionately affected in times of crisis.

The government’s support includes specific measures to promote gender empowerment and climate change adaptation, which have become even more important in light of the recent floods.

ADB’s assistance will help to expand the number of families receiving cash transfers from 7.9 million to 9 million, increase the number of children enrolled in primary and secondary schools, and enhance geographic coverage of health services and nutritional supplies for pregnant and lactating mothers and children under 2 years old.

“The program is part of a comprehensive and well-coordinated package of support. It will help the government deal with the impact of the immediate shocks to the economy, while, in parallel, continue the structural reforms that are necessary to improve the country’s medium- to long-term macroeconomic prospects,” said ADB Director for Public Management, Financial Sector, and Trade Tariq Niazi.

“We are working closely with the International Monetary Fund and other development partners to ensure that our support through policy dialogue, technical assistance, and program lending is well-coordinated and that, ultimately, we are able to help the government improve Pakistan’s resilience to shocks.”

ADB’s $1.5 billion countercyclical support is part of a significant response package to support people, livelihoods, and infrastructure in Pakistan in the wake of the recent floods which have affected over 33 million people and caused extensive damage to infrastructure and agriculture.

Pakistan was a founding member of ADB. Since 1966, ADB has committed over $37 billion in loans, grants, and other forms of financing to promote inclusive economic growth in Pakistan and improve the country’s infrastructure, energy and food security, transport networks, and social services.

October 21, 2022
Suzuki Pakistan announces plant shutdown on inventory shortage

KARACHI: Pak Suzuki Motor Company Limited on Thursday announced a temporary plant shutdown due to shortage of inventory after conditions imposed by the central bank.

In a communication sent to Pakistan Stock Exchange (PSX), the company stated that the State Bank of Pakistan (SBP) had introduced a mechanism for prior approval for importer under HS Code 8703 category, including CKDs through a circular No. 09 issued on May 20, 2022.

READ MORE: Suzuki Motors extends plant shutdown in Pakistan

“Restriction had adversely impacted clearance of import consignment which resultantly affected the inventory levels,” it added.

Therefore, due to shortage of inventor level, the management of the company has decided to shut down automobile plant for period extending from October 24, 2022 to October 26, 2022. “However, motorcycle plant will remain operative,” it said.

READ MORE: Suzuki Motor Pakistan continues plant shutdown

The company for the last several months is making similar announcement due to shortage of inventory and raw material for the locally manufactured cars.

READ MORE: Suzuki Motor announces further plant shutdown in Pakistan

According to latest data of locally assembled car sales, Pak Suzuki witnessed sharp decline during the first quarter (July – September) of fiscal year 2022/2023. The car sales of Pakistan Suzuki fell to 16,639 units during the first quarter of the current fiscal year as compared with 38,431 units in the same quarter of the last fiscal year.

READ MORE: New prices of Suzuki cars in Pakistan from August 16, 2022

October 20, 2022
Current account deficit declines by 37% to $2.21 billion in first quarter

KARACHI: 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 on Wednesday.

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

READ MORE: Pakistan current account deficit narrows by 19% in July – August

State Bank of Pakistan (SBP) on Wednesday issued the summary of balance of payments for the first quarter of the current fiscal year.

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.

READ MORE: Pakistan current account deficit widens by 42% in July 2022

Import bill of the country for the quarter under review sharply declined by 12.37 per cent to $16.4 billion as compared with $18.71 billion in the corresponding quarter of the last fiscal year.

On the other hand, exports of the country recorded an increase of 2.62 per cent to $7.18 billion during July – September of the current fiscal year as compared with $6.99 billion in the same period of the last fiscal year.

READ MORE: Pakistan’s FY22 current account deficit widens to $17.41 bn

However, inflow of home remittances slipped by 6.34 per cent to $7.68 billion during first quarter of the current fiscal year 2022-2023. The inflow of remittances was $8.2 billion in the corresponding quarter of the last year.

The balance of payment posted a deficit of $316 million in the month of September 2022 which was much lower to the deficit of $1.15 billion in the same month of the last year. The deficit is also lower when compared with the deficit of $676 million in the month of August 2022.

READ MORE: Pakistan’s CAD balloons to $15.19 billion in 11 months

October 19, 2022
Pakistan will not default: Ishaq Dar

ISLAMABAD: Finance Minister Mohammad Ishaq Dar on Wednesday said there was no question of Pakistan going into default as the same had been averted, though at a very high political cost.

“I want to give a message to markets through this conference… no need to get nervous, we are back to business, Insha’Allah we will arrange everything. Nothing is to worry,” the minister said while addressing here the All Pakistan Chartered Accountant Conference.

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

He said Pakistan would be fine and nobody should have any problem because “Pakistan will not default”. There were serious challenges the country had been facing, however, the incumbent government had rescued it from default although it had to give a very high political cost.

“If there is a choice between state or politics, the priority should be the state and not the politics as if the country is there, there may be politics. If there is no county where there will be politics?” he asked.

Ishaq Dar said Pakistan would require around $32-34 billion to fulfill its liabilities and financial needs for the fiscal year 2022-23. “These include around $22 billion multilateral-level debt liabilities and around $12 billion current account deficit.”

He, however, vowed that the government would work hard to fulfill the sovereign guarantees to save the country’s pride.

The minister once again clarified the government’s position about rescheduling of the Paris Club’s debts. He said soon after assuming the charge of finance ministry, he had announced that the government would not approach the Paris Club for rescheduling of loans.

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

Likewise, he also rejected the speculations about extending bond maturity dates beyond December 2022. Pakistan, he said, was a sovereign country so it should meet its obligations in time for its own credibility and honour.

He urged the chartered accountants to play their role and influence politicians to work for the betterment of national economy.

Ishaq Dar said Pakistan had deep challenges which were further increased by the devastating floods. He, however, was confident that everything would be corrected as was done back in 1998-99 and 2013, when the country was facing similar challenges.

He said in its last tenure, the Pakistan Muslim League-Nawaz government had put the economy on growth path and it was predicted that it would be become the 18th big economy, leaving behind Canada and Italy, however, due to political interest of some parties it could not be done.

Had the political parties joined the hands together, the country would have achieved the target of becoming the 18th big economy by 2026, however due to political instability, it now stood at 54th position, he lamented.

He had always favoured a ‘Charter of Economy’ that would help put the economy on a sustainable growth path, he remarked.

The minister said the PML-N assumed power in 2013 at a time when the country was facing serious macroeconomic challenges and its was predicted to be going in default in six to seven months.

However, the government fixed the problems and took the economy towards growth, he added. The whole world acknowledged the progress at that time while the country’s ratings went up, the Consumer Price Index (CPI) based inflation was recorded at 4 percent and food inflation at 2 percent. The country had stable currency around Rs104 in parity with dollar and had reserves of around $26 billion.

READ MORE: Moody’s downgrades Pakistan rating to Caa1 from B3

Had that journey been allowed to continue, the country would have become the member of G20 club and 18th big economy, the minister said.

Replying to a question, Dar said that in 2013 Pakistan was on the virtual black List of FATF and due to the hard work by the then PML(N) government, the country was moved into the grey list in 2014 followed by the white list in 2015.

“I had done my projection for the economy and the prime minister is better aware of it,” he said, adding that the government was working on his projections to revive the economy.

To a question, he said the previous government impeded the CPEC projects which led to its increased cost.

READ MORE: Rupee plunges to PKR 220.88 against dollar in interbank

Dar said the inflation did not surge all of a sudden rather it was due to the incompetence of the previous PTI government over the last four years, pushing the country to the prevailing situation.

However, he added, the incumbent government was working to stabalize macroeconomic indicators to control the inflation.

The minister said the dollar appreciated artificially which would be brought down to its natural value below Rs 200.

October 19, 2022
Rupee plunges to PKR 220.88 against dollar in interbank

KARACHI: Pakistani Rupee (PKR) sharply declined against dollar on Wednesday amid falling foreign exchange reserves and high demand for import payments.

The local currency ended down by PKR 1.17 to end at PKR 220.88 against the dollar from previous day’s closing of PKR 219.71 in the interbank foreign exchange market.

READ MORE: Rupee fall continues; Dollar ends at PKR 219.71 in interbank

Currency experts said that the local currency was under pressure during the day due to rising dollar demand for import payments and falling foreign exchange reserves.

The dollar rebounded on October 12, 2022 after making a losing streak for straight 13 sessions to the rupee.

READ MORE: PKR falls to dollar in interbank on Oct 17, 2022

The exchange rate reached to near record low of PKR 239.71 on September 22, 2022 to the dollar but ended at PKR 217.79 on October 10, 2022. Dar recently claimed that the actual value of the dollar is below PKR 200 and he vowed to bring it down.

The rupee hit all-time low of PKR 239.94 against the dollar on July 28, 2022.

READ MORE: PKR falls against dollar on depleting forex reserves

Pakistan’s foreign exchange reserves continued to decline and depleted by $342 million to $13.247 billion by week ended October 07, 2022. The foreign exchange reserves of the country were at $13.589 billion a week ago i.e. September 30, 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 $13.981 billion.

READ MORE: Dollar ends up to PKR 218.38 in interbank on Oct 13, 2022

They said that the rupee had made gain during the past couple of weeks due to various measures taken by the central bank to curb the dollar hoarding.

October 19, 2022
Cabinet approves expansion of advance meters installation

ISLAMABAD: The federal cabinet, chaired by Prime Minister Muhammad Shehbaz Sharif, approved the expansion of the advanced meters project beyond Islamabad to address line losses in the power sector.
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October 18, 2022