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Category: Trade & Industry

This section covers news on trade and industry. Pakistan Revenue is committed to providing the latest updates on business trends.

  • Business Council identifies anomalies in minimum tax regime

    Business Council identifies anomalies in minimum tax regime

    KARACHI: Pakistan Business Council (PBC) has identified anomalies in minimum tax rates and demanded the levy should be abolished.

    In its budget proposals for 2021/2022 submitted to the Federal Board of Revenue (FBR) the council said that the rate of minimum tax of 1.5 percent is extremely high and unrealistic.

    It identified that as per the judgment of the Sindh High Court in case of Kassim Textile, carry forward and adjustment of Minimum turnover tax is not allowed in cases where the taxpayer reports loss. On the other hand, Lahore High Court, in case reported as 2019 PTD 1994, minimum tax, even in case of loss year, is allowed to be carried forward for adjustment.

    Income Tax Law prescribes that ‘income’ of the Zone Enterprise (located in Notified SEZ) is exempt from tax for 10 years. However, no explicit exemption is provided from Minimum Tax (payable under section 113 of the Income Tax Ordinance, 2001) to Zone Enterprises. SEZ Act, 2012 is a special law governing SEZs and Zone Enterprises granting exemption from all income taxes (which include Minimum Tax also), however, due to ambiguity, tax department does not allow exemption from minimum tax to entities operating in SEZ.

    Section 65D/65E of the Income Tax Ordinance, 2001 provides exemption for 5 years from all income taxes [including minimum tax and final tax] to company formed for operating a new industrial undertaking. On the other hand, no such benefit has been provided to an existing company investing for Expansion or extension to achieve benefits of large-scale manufacturing

    Therefore, the PBC proposed that in order to promote industrialization, Minimum tax should be abolished for all listed companies as these companies are subject to stringent regulations and audit. For other companies, rate of minimum tax be reduced gradually by 0.2% on an annual basis so that by Tax Year 2025 the rate is 0.5%.

    Moreover, in order to streamline the mechanism of carry forward and adjustment of Minimum tax, minimum tax should also be allowed to be carried forward for adjustment in subsequent years even in case of losses.

    Exemption from minimum tax to all companies operating in SEZ In line with the tax credits under sections 65D/65E, in order to achieve economies of scale to compete with international suppliers, allow exemption for 5 years from all income taxes [including minimum tax and final tax] on income generated from expansion / extension / BMR projects by an existing industrial undertaking subject to the condition that the minimum investment in such extension / expansion project should not be less than $15 million

  • PBC suggests rationalizing sales tax regime

    PBC suggests rationalizing sales tax regime

    KARACHI: Pakistan Business Council (PBC) has suggested rationalizing sales tax regime as higher standard rate of 17 percent is discouraging documentation.

    In its proposals for budget 2021/2022, the PBC said that the high standard tax rate of 17 percent has led to low registration of less than 200,000 while income tax filers are about 2. 8 million.

    Moreover, Tier 1 retailers engaged in the business of finished fabric, and locally manufactured finished articles of textile, textile made-ups, leather and artificial leather are allowed reduced sales tax rate of 12 percent, if their sales transactions are integrated with the FBR system.

    Unfortunately, several income taxpayers are not willing to register owing to high rate and even retailers are not interested in implementing the POS integration as high rate of 12 percent is not attractive, in addition to other issues.

    The Standard rate and POS rate be gradually reduced by 1 percent per year to attract to encourage the unregistered taxpayers to become registered and avail benefits of input adjustment.

    This will increase the documentation of the economy and create a level playing field for the registered taxpayers.

    It is proposed that Section 3(1A) should be rationalized and further tax should not be applicable if:

    a) Buyer in not required to be registered under Sales Sax Act 1990;

    b) Buyer holds FTN; Buyer, being service provider, is registered under respective provincial authority

  • Pakistan customs assures early disposal of valuation ruling issues

    Pakistan customs assures early disposal of valuation ruling issues

    KARACHI: Pakistan Customs has assured business community of early resolution of pending valuation ruling issues on priority basis.

    Director General Customs Valuation Ms. Shahnaz Maqbool assured this at a meeting held with members of Pakistan Federation of Chambers of Commerce and Industry (FPCCI), a statement said on Thursday.

    According to the statement the FPCCI and Pakistan Customs had agreed in principle to form an advisory committee to resolve issues pertaining to valuation through consultation.

    DG Customs Valuation Ms. Shahnaz Maqbool in a meeting held at Federation House agreed with the various recommendations of Shabbir Mansha Churra – Convener, Central Standing Committee on Customs, FPCCI – and his team.

    The DG also assured of expeditious disposal of cases pending for many years related to valuation rulings. Former President FPCCI Mian Anjum Nisar; VPs FPCCI Hanif Lakhany and Adeel Siddiqui; Former VP Khurram Ejaz and others were also present on the occasion.

    Shabbir Mansha Churra drew the attention of DG Valuation to the growing issues related to valuation rolling; and, said that for strong liaison between FPCCI and Customs, it was necessary to form a Joint Advisory Committee.

    The committee will have representatives of the concerned stakeholders/associations; and, their legal and business experts.

    Mian Anjum Nisar, Former President FPCCI, pointed out that the business community was facing severe problems due to delays in valuation ruling and because of very old valuation business community have to pay extra charges; although, the valuations have come down due to the reduction in the prices of some items.

    But, the business and trade community still have the old rates and it calls for a swift and comprehensive process to update valuation ruling.

    FPCCI demands that businesses that are in appeals with customs valuation should be facilitated by the department on priority basis and resolutions offered.

  • PLGMEA disowns FPCCI advertisement

    PLGMEA disowns FPCCI advertisement

    KARACHI: Pakistan Leather Garments Manufacturers and Exporters Association (PLGMEA) on Tuesday disowned itself from an advertisement issued by the country’s apex trade body.

    PLGMEA Chairman Danish Khan has strongly condemned the advertisement by the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), and said that the apex trade body had used the name without the permission.

    PLGMEA has nothing to do with the advertisement and no such opinion. “We are free to express our position without using the platform of FPCCI,” he said.

    The FPCCI has acted unethically by using the name of the Leather Garments Association members without the permission of PLGMEA.

    He said that the Federation of Pakistan Chambers of Commerce is the apex body of the business community and such high-handed tactics do not beautify such a credible institution. Such measures have tarnished the image of the institution.

    Danish Khan said that PLGMEA was not part of the advertisement and the position presented in it was personal to the FPCCI.

    Chairman PLGMEA demanded FPCCI to apologize from PLGMEA for their biased advertisement and refrain from taking such steps in future. PLGMEA reserved the right to take legal action on such issues.

  • Many taxpayers fail to comply with last date for filing sales tax return

    Many taxpayers fail to comply with last date for filing sales tax return

    KARACHI: The Karachi Chamber of Commerce and Industry (KCCI) on Friday urged the tax authorities to extend the last date for making sales tax payment and filing monthly return for the period of April 2021.

    The KCCI in a statement urged the Federal Board of Revenue (FBR) to extend dates of payment and submission of Sales Tax and Federal Excise Returns for the Tax Period of April 2021 to May 30, 2021 to facilitate taxpayers as many of those had failed to submit their returns before the deadline which ended on May 21, 2021.

    In a statement issued, Chairman Businessmen Group (BMG) and Former President KCCI Zubair Motiwala, while appealing the FBR to extend last date for ST and FE Returns, pointed out that the business community recently underwent prolonged holidays for eight consecutive days while arrival of containers at Karachi Port also suffered delays due to situation triggered by the colossal cargo ship that became stuck on the banks of Egypt’s Suez Canal, blocking traffic through the crucial waterway.

    “Subsequently, the exports of containers which was supposed to be made in the first week of May also delayed with a lapse of at least two weeks which is a big issue for the exporters who are also facing severe liquidity crunch because of the extraordinary situation triggered by the ongoing third wave of COVID-19 pandemic and closure for eight days”, he added.

    President KCCI Shariq Vohra, while referring to his letter sent to Chairman FBR Asim Ahmed, stated that the nominal extension of just three days for filing ST and FE Return was announced earlier by FBR but it was worthless as after observing prolonged holidays, it takes time for many businesses to get back to normalcy. Therefore, many taxpayers were unable to prepare and submit their Sales Tax and Federal Excise Returns for the Month of April 2021 within the announced limited extension of just a few days.

    He further commented that the overall situation was not favorable for trade and industry as everybody was facing severe liquidity crunch nowadays due to very limited business activities hence, the FBR should extend the date of payment and submission of ST and FE Returns up to May 30, 2021.

  • Amnesty scheme should be extended for one year: ABAD

    Amnesty scheme should be extended for one year: ABAD

    KARACHI: The Association of Builders and Developers (ABAD) has demanded the government of extending the amnesty scheme granted for boosting of construction sector.

    ABAD Chairman Fayyaz Ilyas in a statement demanded to extend amnesty scheme for real estate and construction industry by at least one year.

    He said that due to unprecedented situation created by Corona pandemic all over the country and long delay in approval of building plans in Sindh a number of builders and developers could not register their projects under this amnesty scheme.

     Fayyaz Ilyas said that Prime Minister Imran Khan had announced and once extended Special package for real estate and construction industry for economic growth through construction industry because this industry is considered the backbone of the economy all over the world.

    Under extended package, source of income will not be asked for investment in real estate and construction upto 30th June, 2021, Fixed Tax Regime for builders and developers upto 31st December, 2021 and project completion period was extended upto 30th June, 2022.

    Chairman ABAD requested the government to extend these periods atleast upto 30th June, 2022, 31st December, 2022 and 30th June, 2023 respectively so that those people can avail this package who could not avail due to pandemic and lengthy delay in project approvals.

    He said that Pakistan’s economy like other parts of the world has suffered a lot due to corona pandemic.

    It is evident that despite the second wave of corona pandemic production of cement, iron bars, paints, tiles etc have created new records, he said adding that to continue momentum of the economic growth the government should extend the Special package for real estate and construction industry otherwise the results achieved through this package will go in the vain.

  • Yarn merchants demand date extension for filing sales tax return

    Yarn merchants demand date extension for filing sales tax return

    KARACHI: Pakistan Yarn Merchants Association (PYMA) on Wednesday urged the tax authorities to extend the date for payment of sales tax and filing monthly return for the period April 2021.

    In a joint statement, Hanif Lakhany, Vice President, Federation of Pakistan Chambers of Commerce & Industry (FPCCI) and PYMA Senior Vice Chairman and Farhan Ashrafi, Vice Chairman PYMA & convener FPCCI’s Central Standing Committee on Yarn Trading, have urged the Chairman of Federal Board of Revenue (FBR) for extension in dates of payment and submission of Sales Tax and Federal Excise Return for the Tax Period of April 2021, by at least 2 weeks, as business community could not file sales tax and federal excise returns due to the long Eid holidays.

    In a letter to FBR Chairman Asim Ahmed, Hanif Lakhany and Farhan Ashrafi stated that in response to PYMA’s demand for extension till May 31, 2021, the dates for filing sales tax & FE returns extended till May 18, 2021 only.

    “But the Eid holidays did not benefit the business community and they could not prepare and submit their sales tax and federal excise returns for the month of April 2021 in the limited number of days announced,” according to the statement.

    “It is difficult for the business community to work in the face of the COVID-19 pandemic, given the already limited business hours and the risks of the epidemic,” they added.

    In such a situation, the FBR needs to make it easier for the business community to file their taxes easily.

    Hanif Lakhany and Farhan Ashrafi requested the Chairman FBR to extend the deadline for submission of sales tax and FE returns by at least 2 weeks, so that the business community can submit their returns without any hassle, which will be warmly welcomed by the business community.

  • ABAD demands abolishing regulatory duty on steel bars

    ABAD demands abolishing regulatory duty on steel bars

    KARACHI: The Association of Builders and Developers (ABAD) on Tuesday called on the government to abolish the Regulatory Duty (RD) and Additional Regulatory Duty (ARD) on the import of steel bars, emphasizing the need to stabilize their soaring prices in the domestic market.

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  • FPCCI urges tax rate cut in budget to mitigate coronavirus losses

    FPCCI urges tax rate cut in budget to mitigate coronavirus losses

    KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) on Monday sought sizeable cut in tax rates in upcoming budget 2021/2022 to mitigate industrial losses due to coronavirus.

    FPCCI’s Businessmen Panel Chairman Mian Anjum Nisar, in a statement, said that the government will have to make visible reduction in taxes in the budget 2021-22 to help revive the businesses in post-corona economic strategy.

    He recommended the government to take serious steps for bringing down cost of production, which is very high due to local currency depreciation, rising power tariffs, costly fuel and escalating import duties on inputs.

    While talking to a traders delegation here on Monday, Mian Anjum Nisar, who is also former president of FPCCI, said that like the domestic industry Covid-19 crisis has also forced the global investors to put their new investment plans on hold. He said that there is no visible improvement in employment even after the business activities were allowed and countrywide lockdown eased. The small and medium industries (SMEs) -the main providers of jobs are still struggling because of lack of funds and demand.

    Mian Anjum Nisar asked the government to take concrete steps to attract foreign investment, saving the livelihood of millions of workers associated with various sectors, as Foreign direct investment (FDI) has kept falling during the current fiscal, declining by 35 percent at the end of the third quarter, reflecting no improvement in the situation for investors.

    Quoting the SBP data, he said that the FDI fell by 35% to $1.39 billion during July-March FY21 compared to $2.15 billion in the same period of last fiscal. The inflow in March was just $167.6 million compared to $278.7m in the same month of last year — a decline of 40%.

    While the poor inflows of FDI have continued for more than five years, the government remained unable to offer anything new to attract foreign investors this year, mainly due to the coronavirus pandemic.

    Pakistan has reopened its economy from the lockdown. Majority of the sectors in manufacturing and almost entire agriculture sector are operational now. He said that foreign direct investment figures of the previous year reflected the same poor scenario.

    The BMP Chief said that Pakistan has succeeded to improve its balance of payments with record remittances in FY20. He said that Pakistan can be a potential market for foreign investors, who still have plans to make fresh investment in the country, but they have continued to wait for the return of economic stability. He highlighted uncertainty in the rupee-dollar parity as one of the major concerns of foreign investors.

    He said a slowdown in the economy had badly impacted business confidence. It is must for the authorities concerned to first create an enabling environment for the local businessmen desiring to make new investment. He said that the return of stability to the financial health of the firms is a must to attract new foreign investment in Pakistan.

    Resenting frequent increase in power tariff the FPCCI former president strongly opposed the government plan of increasing base electricity tariff across the country by a cumulative Rs5.36 per unit in three phases over the next two years.

    Mian Anjum Nisar said the constant increases in energy rates on the behest of the International Monetary Fund would make the Pakistani products uncompetitive in the international market.

    He said the regular attempt of economic managers to increase oil prices along with the hike in power and gas tariffs will ultimately harm the government’s overall move of reducing the production cost in the country announced by the prime minister in various phases.

    Mian Anjum Nisar said it was imperative to make power and gas tariffs for domestic, as well as export sectors compatible with the tariff being applied in regional and neighbouring countries.

    He said that with a view to save the economy from the impacts of the slowdown due to the COVID-19 the government should offer out of the box solution for a cash-strapped SMEs, which represents more than 90 percent of around 3.2 million business enterprises in Pakistan, contributing 40 percent to the GDP, employing more than 80 percent of non-agricultural workforce, and generating 25 percent of export earnings.

  • Industry perturbs over rampant street crime

    Industry perturbs over rampant street crime

    KARACHI: Business community is worried over rampant incidents of street crimes in the metropolis ahead of Eid holidays, according to a statement issued on Tuesday.

    The statement issued by Pakistan Hosiery Manufacturers Association (PHMA) informing the Chief Minister of Sindh about the rampant incidents of car snatching and stealing valuables and expensive parts from a vehicle parked out on the side of a road and cash snatching withdrawal from banks.

    Member industrialists have approached the Association conveying their genuine concerns sense of insecurity and said that it seems that police and other law enforcement agencies are busy in lockdown activities due to COVID19 and the general public are deprived of their valuables.

    One incident has taken place at Jamia Masjid Faruq e Azam near Boat Basin where a person has parked the vehicle to offer Asr Namaz when arrived back mirror of the vehicle was broken and valuables were stolen by the thieves.

    The whole theft was wrapped up in 2-3 minutes and even more perturbing is the fact that all this happened in broad daylight. 

    No wonder, they don’t need the cover of darkness. The public is quite afraid and avoids going for even Namaz in the masjid when they are commuting on their vehicles due to increased incidents of stealing and snatching.

    “We have also enquired from the suppliers/shopkeepers of parts market and they informed that the sale of the side mirror, window glass, and back glasses has increased manifold during last 2-3 weeks and stated that they have never seen such a historic sale in their whole life which is alarming,” according to the statement.

    It is the need of the hour to take immediate safety measures and strict action against the criminal elements area otherwise all the efforts in the past which revived peace and security will go in vain.

    Therefore, the gravity of the situation demands your immediate intervention and direct the police department to increase the patrolling and deploy policemen on key points of the areas for the safety and security of the karachiities.