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Top stories featuring the most important and trending news updates from politics, business, world affairs, and breaking events across various sectors.

  • Rupee falls Rs4.37 to dollar in fresh wave

    Rupee falls Rs4.37 to dollar in fresh wave

    KARACHI: The Pakistan Rupee (PKR) has lost Rs4.37 to the dollar during last three straight days on Wednesday.

    The rupee fell by Rs1.48 to the dollar on Wednesday to close at Rs185.92 as compared with previous day’s closing of Rs184.44 in the interbank foreign exchange market.

    READ MORE: Dollar climbs up to Rs184.44 at interbank closing

    The rupee lost around Rs4.37 against the dollar during past three trading sessions after making a sharp recovery to Rs181.55 on April 16, 2022. It is pertinent to mention that the local currency made this recovery after touching all-time low at Rs188.18 on April 07, 2022.

    The fresh wave of rupee depreciation has been attributed to import and external debt payments.

    The recent measures of the State Bank of Pakistan (SBP), including raising the key policy rate by 2.5 per cent, have failed to support the local currency.

    Previously, the rupee made significant recovery for seven consecutive trading sessions after the central bank announced a sharp increase in key policy rate.

    READ MORE: Dollar ends PKR recovery spree; closes at Rs182.54

    The SBP on April 07, 2022 announced 2.5 per cent increase in interest rate to enhance the key policy rate to 12.25 per cent from 9.75 per cent. The rupee was at all-time low Rs188.18 to the dollar on the day of monetary policy announcement.

    However, following the announcement the rupee rallied for seven straight days and recovered Rs6.63 against the dollar.

    The appreciation in dollar value may be attributed to the further depletion in foreign exchange reserves of the county.

    Pakistan’s foreign exchange reserves hit a 22-month low after falling for nine consecutive weeks to $17.03 billion.

    READ MORE: Dollar plummets against PKR for seven consecutive days

    According to data released by the State Bank of Pakistan (SBP), the foreign exchange reserves of the country fell by $449 million to $17.028 billion by week ended April 08, 2022 as compared with $17.477 billion a week ago.

    The foreign exchange reserves were at $17.971 billion by week ended June 26, 2020.

    Pakistan’s foreign exchange reserves have declined by $10.23 billion in the past seven months owing to extreme pressure of dollar demand for import payments and external repayment of government debt.

    READ MORE: Dollar retreats for 6th straight day; falls to Rs181.58

  • FBR forms committee to resolve pharmaceutical tax issues

    FBR forms committee to resolve pharmaceutical tax issues

    KARACHI: Federal Board of Revenue (FBR) on Wednesday constituted a committee for resolution of issues of pharmaceutical companies.

    The issues resolution committee will be headed by Chief Commissioner-Inland Revenue, Large Taxpayers Office (LTO), Karachi and comprising officers of FBR for resolution of issues of pharmaceutical companies.

    READ MORE: FBR allocates quota for industries in erstwhile FATA/PATA

    The committee comprises following officers:

    01. Shahid Iqbal Baloch, Chief Commissioner-IR, LTO Karachi (Head).

    02. Sabih ul Aijaz, Commissioner-IR, LTO Lahore.

    03. Masood Akhtar, Commissioner – IR, LTO Islamabad.

    04 .Abdul Jawwad, Commissioner – IR, LTO Karachi.

    READ MORE: FBR announces prize winners of 4th POS invoice draw

    05. Dr. Najeeb Ullah, Commissioner – IR, LTO Karachi.

    06. Dr. Muhammad Khurram, Additional Commissioner – IR, LTO Islamabad.

    07. Ms. Haida Sajjad, Deputy Commissioner-IR, CTO Lahore.

    08. Farrukh Aslam, Deputy Commissioner-IR, LTO Lahore.

    09. Anees Ahmed, Deputy Commissioner-IR, LTO Karachi.

    10. Sharjeel Ahmed, Deputy Commissioner-IR, LTO Karachi.

    12. Ms. Muntaha Saleem, Deputy Commissioner – IR, CTO Islamabad.

    13. Aziz Iqbal, IR Audit Officer, MTO Karachi.

    READ MORE: FBR takes measures to facilitate taxpayers in 1HFY22

    14. Muhammad Haider, Assistant Commissioner – IR, CTO Karachi.

    15. Naeem Akbar, Senior Auditor – IR, LTO Karachi.

    16. Shahid Rehan, Senior Auditor – IR, LTO Karachi.

    The Term of Reference (TOR) of the complaint resolution committee are:

    READ MORE: Tax incentive granted for revival of sick industrial units

    i. Review the nature of grievance/issue possible solution and take immediate action for its resolution;

    ii. Follow up with concerned field formation till issue is resolved;

    iii. Maintain complete record of complaints/issues, mechanism adopted for resolution and post resolution action required; and

    iv. Share data with the Board on monthly basis indicating issues received, issues resolved and issues pending for resolution and reasons for pendency.

  • Dollar makes sharp midday gain to reach PKR 186

    Dollar makes sharp midday gain to reach PKR 186

    KARACHI: The US dollar made a sharp gain against the Pakistan Rupee (PKR) to reach Rs186 during midday trading at interbank foreign exchange market.

    The dollar gained around Rs1.56 to reach Rs186 during the midday trading against the last day’s closing of Rs184.44 in the interbank foreign exchange market.

    READ MORE: Dollar climbs up to Rs184.44 at interbank closing

    Currency analysts said that due to import and external debt payments the local currency was under severe pressure.

    The recent measures of the State Bank of Pakistan (SBP), including raising the key policy rate by 2.5 per cent, have failed to support the local currency.

    The fresh wave of rupee depreciation may be attributed to higher demand of the foreign currency for external debt repayment.

    READ MORE: Dollar ends PKR recovery spree; closes at Rs182.54

    Previously, the rupee made significant recovery for seven consecutive trading sessions after the central bank announced a sharp increase in key policy rate.

    The SBP on April 07, 2022 announced 2.5 per cent increase in interest rate to enhance the key policy rate to 12.25 per cent from 9.75 per cent. The rupee was at all-time low Rs188.18 to the dollar on the day of monetary policy announcement.

    However, following the announcement the rupee rallied for seven straight days and recovered Rs6.63 against the dollar.

    READ MORE: Dollar plummets against PKR for seven consecutive days

    The appreciation in dollar value may be attributed to the further depletion in foreign exchange reserves of the county.

    Pakistan’s foreign exchange reserves hit a 22-month low after falling for nine consecutive weeks to $17.03 billion.

    According to data released by the State Bank of Pakistan (SBP), the foreign exchange reserves of the country fell by $449 million to $17.028 billion by week ended April 08, 2022 as compared with $17.477 billion a week ago.

    READ MORE: Dollar retreats for 6th straight day; falls to Rs181.58

    The foreign exchange reserves were at $17.971 billion by week ended June 26, 2020.

    Pakistan’s foreign exchange reserves have declined by $10.23 billion in the past seven months owing to extreme pressure of dollar demand for import payments and external repayment of government debt.

    The country’s foreign exchange reserves hit an all-time high of $27.228 billion on August 27, 2021.

    READ MORE: Rupee up 13 paisas to continue recovery against dollar

  • Pakistan’s FDI falls to $1.28 billion in July – March

    Pakistan’s FDI falls to $1.28 billion in July – March

    KARACHI: The inflow of foreign direct investment (FDI) into Pakistan has declined by two per cent to $1.28 billion during first nine months (July-March) 2021/2022, according to detail released by the State Bank of Pakistan (SBP) on Tuesday.

    READ MORE: Foreign investment into Pakistan surges by 131%

    The country recorded the FDI inflow to the tune of $1.31 billion in the corresponding months of the last fiscal year.

    The portfolio investment recorded 30 per cent decline during the first nine months of the fiscal year 2021/2022. The capital market witnessed outflow of $341.7 million during the period under review as compared with $262.7 million during the same period of the last fiscal year.

    READ MORE: Foreign investment surges by 176% during July – January

    The total inflow of private foreign investment recorded 10 per cent decline to $943.4 million during July – March 2021/2022 as compared with $1.048 billion in the corresponding period of the last fiscal year.

    READ MORE: Pakistan’s foreign investment surges by 73% in 5 months

    The country witnessed massive jump in inflows under debt securities. The country received funds worth $502.6 million through sale of securities in the international markets during the first nine months of the current fiscal year as compared with $3.5 million outflows in the same period of the last fiscal year.

    The total foreign investment, including debt securities, grew by 38.4 per cent to $1.446 billion during July – March 2021/2022 as compared with $1.045 billion in the corresponding months of the last fiscal year.

    READ MORE: Carrefour enhances Pakistan investment to Rs10.5 billion

  • Mismatch identified in GST rates on supply, sales by IPPs

    Mismatch identified in GST rates on supply, sales by IPPs

    KARACHI: Overseas Investors Chamber of Commerce and Industry (OICCI) has identified mismatch in General Sales Tax (GST) rates between supply and sales resulting in excessive sales tax refundable build up.

    The OICCI in its proposals for budget 2022/2023 submitted to the Federal Board of Revenue (FBR), said that Independent Power Producers (IPPs) revenue mainly comprises of two components “Capacity Price Payment” (CPP) and “Energy Price Payment” (EPP).

    READ MORE: Tax rate rationalization proposed for exploration, production companies

    As per the current sales tax law output sales tax is only applicable on EPP as a result IPPs are not able to fully adjust the input sales tax charged leading to build up of sales tax refund.

    It is recommended that the IPP sector is already facing circular debt issues and in addition to that huge amount of Sales Tax Refunds are further worsening the working capital conditions of the industry. It is proposed that supply of fuel to IPPs (Coal/ Gas / HSD, etc.) should be exempted from Input Sales Tax.

    READ MORE: FBR urged to restore sales tax exemption on LED lights

    The OICCI said since 1994 the dividend income paid by Independent Power Producers (IPP’s) was subject to tax @ 7.5 per cent under the repealed Income Tax Ordinance, 1979 (ITO, 79). This was also the full and final tax in the hands of recipients and IPPs’ shareholders did not have to pay any additional tax when filing their tax returns, which have been revised as follows vide Finance Act 2019:

    i. In clause (a), the reduced tax rate of dividend of 7.5 per cent for power generation industry (covering power purchaser, producer, and supplier of coal to power producer) has been restricted to power producers only where such dividend is pass through under CPPA, and

    ii. Higher rate of tax of 25 per cent has been introduced under clause (c) of the said section for the Companies that have nil tax liability due to carry forward of losses, tax exemption or tax credits.

    READ MORE: Minimum tax 0.2% suggested for listed chemical companies

    Hence, in case of power producers (having non-pass-through agreements with CPPA) and coal suppliers, that previously enjoyed reduced rate under clause (a), the tax rate has been drastically increased from 7.5 per cent to 25 per cent due to exclusion from revised clause (a) and applicability of the new clause (c) as these entities are currently in tax holiday.

    It is recommended:

    i. Clause (a) of Division III of Part I of First Schedule as applicable before Finance Act 2019, should be reinstated, to include power producer companies (having non-pass-through agreements) and coal suppliers.

    ii. Similarly, amendment be made for the withholding tax rates specified in clause (a) of Division I of Part III of the First Schedule, by reinstating the position prior to Finance Act 2019.

    iii. The new clause (c) of Division III of Part I of First Schedule, inserted by Finance Act, 2019 be removed being against the fundamental principles of ITO, 2001.

    READ MORE: Proposals for capital gain on disposal of securities by insurance companies

    The chamber further informed that as a result of the passing of the Finance (Supplementary) Act, 2022 (“FSA”), the exemption provided to the power sector (“IPPs”) from payment of Sales Tax on the import of machinery and equipment provided under Table-3 of the Sixth Schedule to the Sales Tax Act, 1990 has now been withdrawn.

    Under various power policies, the GOP has guaranteed the exemption of sales tax on the import of plant and machinery till the Commercial Operations Date of the IPPs.

    It is recommended either the exemptions are restored or a proviso similar to the proviso inserted by the FSA in clause 132 Part I of the Second Schedule to the Income Tax Ordinance, 2001 be inserted.

    (Provided further that the exemption under Serial 4, 5 & 6 Table 3 of the Sixth Schedule to the Sales Tax Act, 19s90 shall be available to persons who entered into the agreement or letter of intent is issued by the Federal or Provincial Government for setting up an electric power generation project in Pakistan on or before the thirtieth day of June 2021 and who obtains a letter of support on or before the thirtieth day of June 2023.

  • PBC submits measures to avoid challenges confronting Sri Lanka

    PBC submits measures to avoid challenges confronting Sri Lanka

    KARACHI: Pakistan Business Council (PBC) has urged the new prime minister of Pakistan Shahbaz Sharif don’t allow the country to experience the kind of challenges confronting Sri Lanka.

    The PBC in a letter congratulated the Prime Minister and assured him of full support in tackling the challenges facing the economy.

    READ MORE: Minimum tax 0.2% suggested for listed chemical companies

    The PBC recommended the new prime minister to stem the pressure on foreign exchange reserves by reducing imports. “Don’t allow the country to experience the kind of challenges confronting Sri Lanka,” it said. In order the discourage imports, the PBC recommended raising regulatory duty on import of non-essentials. Further, as regulatory duty is impractical on fuel imports, limit import through conservation measures: work from home, early closure of commercial centers and wedding halls; rationing of fuel private vehicles.

    There are several very critical choices that your government needs to make in the next few days. Foremost amongst these is restoring fiscal prudence, stemming the pressure on the foreign exchange reserves and reviving the IMF programme. In the attached summary we have listed the immediate economic imperatives and offered our suggestions on the way forward.

    READ MORE: Proposals for capital gain on disposal of securities by insurance companies

    The PBC urged the prime minister to restore fiscal prudence by withdrawal of general subsidy on fuel. “Replace with targeted assistance through BISP,” it recommended. The council suggested to avoid further populist measures that also result in increasing the inflation.

    The PCB recommended equitable taxation and urged the prime minister for avoiding burdening existing taxpayers further. “Avoid knee-jerk revenue seeking measures that impact the long term health of the economy,” it added.

    READ MORE: FBR urged to align corporate tax rate for banks

    The PBC suggested to accelerate Federal Board of Revenue (FBR) reforms to broaden the tax base, pending which, increase the advance and withholding tax rates on non-filers.

    Review anomalies that arose from hasty changes to meet the claimed demands of the IMF: Multiple taxation of inter-corporate dividends and other anomalies in group taxation; tax credits for investment; and other exemptions that still had time to run.

    It is further suggested to phase down the inequitable minimum and advance taxes on the formal sector which raise the cost of doing business.

    READ MORE: OICCI suggests duty cut on locally manufactured cars

  • Dollar climbs up to Rs184.44 at interbank closing

    Dollar climbs up to Rs184.44 at interbank closing

    KARACHI: The Pakistan Rupee (PKR) fell sharply against the dollar on Tuesday and ended at Rs184.44 in the interbank foreign exchange market.

    The local currency fell by Rs1.9 to end at Rs184.44 to the dollar from previous day’s closing of Rs182.54 in the interbank foreign exchange market.

    It was second straight day when the rupee declined sharply against the greenback. The local currency deteriorated by Rs2.89 against the dollar.

    The fresh wave of rupee depreciation may be attributed to higher demand of the foreign currency for external debt repayment.

    Previously, the rupee made significant recovery for seven consecutive trading sessions after the central bank announced a sharp increase in key policy rate.

    READ MORE: Dollar ends PKR recovery spree; closes at Rs182.54

    The SBP on April 07, 2022 announced 2.5 per cent increase in interest rate to enhance the key policy rate to 12.25 per cent from 9.75 per cent. The rupee was at all-time low Rs188.18 to the dollar on the day of monetary policy announcement.

    However, following the announcement the rupee rallied for seven straight days and recovered Rs6.63 against the dollar.

    READ MORE: Dollar plummets against PKR for seven consecutive days

    The rebound in dollar value on Monday may be attributed to the further depletion in foreign exchange reserves of the county.

    Pakistan’s foreign exchange reserves hit a 22-month low after falling for nine consecutive weeks to $17.03 billion.

    According to data released by the State Bank of Pakistan (SBP), the foreign exchange reserves of the country fell by $449 million to $17.028 billion by week ended April 08, 2022 as compared with $17.477 billion a week ago.

    READ MORE: Dollar retreats for 6th straight day; falls to Rs181.58

    The foreign exchange reserves were at $17.971 billion by week ended June 26, 2020.

    Pakistan’s foreign exchange reserves have declined by $10.23 billion in the past seven months owing to extreme pressure of dollar demand for import payments and external repayment of government debt.

    The country’s foreign exchange reserves hit an all-time high of $27.228 billion on August 27, 2021.

    READ MORE: Rupee up 13 paisas to continue recovery against dollar

  • PKR falls sharply by Rs2.26 to dollar in interbank midday trading

    PKR falls sharply by Rs2.26 to dollar in interbank midday trading

    KARACHI: The Pakistan Rupee (PKR) fell sharply by Rs2.26 against the US dollar on Tuesday during midday trading at interbank foreign exchange market.

    The dollar is currently trading at Rs184.80 from last day’s closing of Rs182.54 in interbank foreign exchange market.

    READ MORE: Dollar ends PKR recovery spree; closes at Rs182.54

    The rupee made significant recovery for seven consecutive trading sessions after the central bank announced a sharp increase in key policy rate.

    The SBP on April 07, 2022 announced 2.5 per cent increase in interest rate to enhance the key policy rate to 12.25 per cent from 9.75 per cent. The rupee was at all-time low Rs188.18 to the dollar on the day of monetary policy announcement.

    READ MORE: Dollar plummets against PKR for seven consecutive days

    However, following the announcement the rupee rallied for seven straight days and recovered Rs6.63 against the dollar.

    The rebound in dollar value on Monday may be attributed to the further depletion in foreign exchange reserves of the county.

    Pakistan’s foreign exchange reserves hit a 22-month low after falling for nine consecutive weeks to $17.03 billion.

    READ MORE: Dollar retreats for 6th straight day; falls to Rs181.58

    According to data released by the State Bank of Pakistan (SBP), the foreign exchange reserves of the country fell by $449 million to $17.028 billion by week ended April 08, 2022 as compared with $17.477 billion a week ago.

    The foreign exchange reserves were at $17.971 billion by week ended June 26, 2020.

    READ MORE: Rupee up 13 paisas to continue recovery against dollar

    Pakistan’s foreign exchange reserves have declined by $10.23 billion in the past seven months owing to extreme pressure of dollar demand for import payments and external repayment of government debt.

    The country’s foreign exchange reserves hit an all-time high of $27.228 billion on August 27, 2021.

  • FBR urged to align corporate tax rate for banks

    FBR urged to align corporate tax rate for banks

    KARACHI: Federal Board of Revenue (FBR) has been urged to bring corporate tax rate for banking companies at par with the other sectors.

    Overseas Investors Chamber of Commerce and Industry (OICCI) in its proposals for budget 2022/2023 pointed out towards higher effective tax of banking sector.

    It recommended that corporate tax rates for the banking sector should be aligned with other sectors. Super Tax relief, as granted to other industries, should be given to banking sector as well.

    The OICCI also pointed out enhanced rate of tax on income from investment in Federal Government Securities (Rule 6C of Seventh Schedule). It recommended that the banking sector is already burden with higher tax rates as compared to other service sectors. Incremental tax applied under Rule 6C (6A) of seventh schedule of Income Tax Ordinance, 2001 should be deleted, whereby enhanced rate is applied on banks total income ratio (ADR).

    Alternatively, enhanced tax shall be reverted to the previous condition, i.e. incremental tax shall be applicable on Additional income from additional investment in government securities rather than total income.

    The overseas chamber further recommended the original provisions of the Seventh Schedule should be restored where provision for bad debts as per the Prudential Regulations of SBP and supported by an Auditors certificate was allowable as a tax deduction to the banks.

    Alternatively, threshold for allowing provision for bad debts should be increased to 2 per cent of gross advances to corporate customers without the categorization of loss, doubtful or substandard and delete the Explanation inserted through Finance Act, 2019 along with the Clauses 1(d), (e) and (f).

    Overriding Provision in Seventh Schedule to Income Tax Ordinance, 2001. The rule 9 of the Seventh Schedule of ITO 2001 should be deleted as it is being misused and leading to unnecessary litigation.

    Regarding Islamic banks, the OICCI said Rule 3 (1) & (2) of Seventh Schedule of Income Tax Ordinance, 2001 should be replaced with the following text under Rule 3(1):

    “The audited financial statements of Islamic Banks and Disclosure related to Islamic window operations of the conventional banks as contained in the audited financial statements submitted to the State Bank of Pakistan shall form the basis for the calculation of income tax liability as provided in this Schedule.”

    The OICCI pointed out withholding tax on all modes of Islamic financing and recommended that tTo provide tax neutrality for assets financed by Islamic banks and Islamic windows of conventional vis- a vis conventional banks. Following clarification be inserted after clause 153(7)(iii):

    “For the removal of doubt, it is clarified that any goods delivered under an Islamic modes of financing by a bank or financial institution approved by the State Bank of Pakistan or the Securities Exchange Commission of Pakistan, shall not be considered as sale of goods for the purpose of this section.”

  • Sri Lankan default impact on Pakistani banks

    Sri Lankan default impact on Pakistani banks

    KARACHI: Pakistani banks operating in Sri Lanka will have adverse effect on their books due to declaration of Sri Lanka for failure to repay its foreign debt.

    In a recent development, Sri Lanka announced that it would be defaulting on its external obligations due to dwindling foreign exchange reserves.

    Sri Lanka’s total external debt currently stands at $51 billion, i.e. 60 per cent of GDP.

    As per foreign news agency, Sri-Lanka has to make a foreign repayment of $4 billion, including $1 billion sovereign bond maturing in July 2022.

    Insight Securities said that its banking universe including UBL, MCB, HBL, and BAHL holds Sri Lanka sovereign instruments in their investment book (both USD denominated & Local currency), may result in revaluation loss or provision charge.

    Sri-Lanka’s central bank governor said that this suspension of payment would be placed until the country reaches an agreement with creditors and alongside with the International Monetary Fund (IMF).

    The analysts believed that this declaration of default will only affect USD denominated bonds while the CBSL (Central bank of Sri Lanka) will continue to honor domestic bonds i.e. T-bills. However, disclosure of local and USD-denominated sovereign bonds is not available in respective banks financials.

    It is worth mentioning that these above abstracts are based on the CY21 financial statement, and there is a possibility that these banks have already reduced their exposure before the default announcement.

    Analysts at Arif Habib Limited said that the economic crisis in Sri Lanka seems to be worsening with the authorities announcing temporarily default on its foreign debts.

    With more than $50 billion in external debt and foreign exchange reserves hovering around $1.9 billion (last month), the country is currently struggling to make payments on its international sovereign bonds.

    Media sources suggest, this week $36 million interest payment is due on a Sri-Lanka’s 2023 dollar bond as well as $42.2 million on 2028 note.

    Moreover, a $1 billion sovereign bond is maturing on July 25th, 2022.

    The extraordinary measure taken by the Sri-Lankan authorities to halt payments on foreign debt is to preserve its dwindling reserves for the purpose of importation of essentials such as food, fuel and medicine.

    Going forward, the analysts believe, the options available to the Sri-Lankan government include: negotiation of a settlement in which bondholders are given new bonds that are worth less but help provide some partial compensation, or restructuring of the current one with the support of IMF which media sources claim to be likely Sri Lanka’s strategy.

    It is pertinent to note here that some of the Pakistani banks are exposed to the Sri-Lankan economy either through branch banking or investments in the government debt securities.

    Amongst our AHL coverage banks, MCB has eight branches in the Lankan territory while HBL operates with three branches in the country.