Pkrevenue.com

Category: Trade & Industry

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

  • Tax measures, rupee depreciation adversely hit auto industry

    Tax measures, rupee depreciation adversely hit auto industry

    KARACHI: The revenue measures taken by the government in the budget 2019/2020 and massive depreciation in Pak Rupee value have been major challenges for the auto industry as these factors have already adversely hit the sales volumes in the first half (January – June) 2019, a report said.

    Pak Suzuki Motors Company Limited in its report for the period ended June 30, 2019 (January – June 2019) said that sales volume of auto industry for cars and light commercial vehicles was recorded at 118,519 units compared to 134,494 units in corresponding period of last year, registering decrease of 12 percent.

    Sales volume of the Company during the half year January – June 2019 declined by 11 percent from 76,482 units to 68,147 units, in line with industry trend.

    The total sales volume of the Company represented 56 percent of Pakistan’s total market of cars and light commercial vehicles. The Company operated at 80 percent capacity utilization and achieved production volume of 60,098 units, the report said.

    During the period under review, the organized market (PAMA member companies) for motorcycles and three wheelers decreased from 990,102 units to 855,396 units. Decrease of 134,706 units represents 14 percent decline in sales volume over same period of last year. However, Company sales volume remained consistent and achieved sales volume of 11,600 units as compared to sales volume of 11,292 units in corresponding period of last year.

    The report said that the company incurred net loss of Rs 1,526 million compared to net profit Rs 1,298 million in same period of last year. Net sales revenues increased by Rs 3,145 million from Rs 62,284 million (Jan-Jun 2018) to Rs 65,429 million (Jan-Jun 2019).

    Higher prices in current period contributed in increased sales revenue by 5 percent over the same period of last year. Gross profit decreased in absolute terms by Rs 2,886 million from Rs 4,258 million (Jan-Jun 2018) to Rs 1,372 million (Jan-Jun 2019). Gross profit margins as a percentage of net sales declined from 6.8 percent to 2.1 percent of net sales.

    “Devaluation of Pak Rupee resulted in increase in imported material cost, consequently adversely affecting the gross profit margins.”

    It said that Pakistan’s economy is in difficult situation. “We witnessed sharpest increase in policy rates in recent time by State Bank of Pakistan (SBP).”

    SBP further increased policy rate by 100 basis points to 13.25% in ‘Monetary Policy’ announced in July 2019. Average inflation for fiscal year 2019-20 is expected to remain in the range of 11% to 12% due to higher fiscal deficit, inflation and Pak Rupee depreciation.

    In July 2019, the Executive Board of the IMF program approved a 39-month arrangement under the Extended Fund Facility (EFF) for US$ 6 billion to support the Government of Pakistan’s economic reform program.

    Outlook for external financing has improved with the disbursement of the first IMF tranche associated with IMF EFF, activation of Saudi Oil Facility and other commitments from multilateral and bilateral partners.

    Current Account deficit has continued to fall reducing external pressure.

    The tax measures announced in the Federal Budget 2019-20 have severely hit the auto industry. Additional Customs Duty (ACD) on imported material has been increased by 2 percent to 5 percent. The government also imposed ‘Regulatory Duty’ on import of different kinds of vehicles. The government has enlarged the scope of Federal Excise Duty (FED) and imposed FED on locally assembled cars as well as on imported cars at the rate of 2.5 percent with engine capacity up to 1000cc, 5 percent from 1001cc to 2000cc and 7.5 percent on 2001cc and above.

    Tax credit on investment in Plant & Machinery under section 65B of Income Tax Ordinance 2001 has been reduced from 10 percent to 5 percent for tax year 2019 while no tax credit from tax year 2020 and onwards.

    Further Government withdrew gradual reduction in corporate tax rate from 29 percent to 25 percent and on the other hand increased minimum tax from 1.25 percent to 1.5 percent of turnover.

    “These additional taxes coupled with massive depreciation of Pak Rupee adversely affected the cost of vehicles and it forced the OEMs to increase the prices of their vehicles,” the report said, adding that consequently, higher prices of vehicles will likely affect sales volume of auto industry as price hikes will weaken the purchasing power of costumers.

    According to the report the Company is endeavoring to improve sales, profitability and diversity in its operations by upgrading the existing products and launching new products.

    The company launched the New Alto in June 2019. New Alto harbors contemporary 660cc R-series engine, modern design, spacious interior with great fuel efficiency and Japanese technology.

    New Alto received overwhelming response from customers due to its distinguished features.

    Macroeconomic indicators of the country are challenging for auto industry. Pak Rupee devaluation, rising raw material prices, increase in interest rate and additional taxes and duties imposed through Federal Budget are major challenges for auto industry.

    Variation in forex rates and import duties influenced the pricing of products due to high element of imported components in total cost of products. Your Company has geared up to meet the challenges in future with wide range of quality products at competitive prices through an efficient network of authorized dealers.

  • FPCCI demands immediate release of export refunds, duty drawbacks

    FPCCI demands immediate release of export refunds, duty drawbacks

    KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has demanded the government of issuing all outstanding export refunds, rebates and duty drawbacks.

    In a statement issued on Tuesday, Engr. Daroo Khan Achakzai, President, FPCCI urged the Advisor to the Prime Minister on Finance & Revenue, Dr. Abdul Hafeez Shaikh to fulfil his commitments made, from time to time, particularly in the Finance Act, 2019 and release export sectors’ all accumulated refund claims including deferred Claims ; Customs Duty Drawback ; DLTL etc., lying pending for payment since long for facilitating and enabling environment to the exporters to overcome their liquidity crunch, meet their export orders well in time; enhance exports and reduce trade deficit so that the export targets as envisaged in the Finance Act, 2019 are met.

    Referring to the Finance Act, 2019 the FPCCI Chief recalled that although a provision had been introduced wherein promissory notes would be issued to the Claimants at their option by a newly formed company called the FBR Refund Settlement Company Ltd., but there is a very slow progress in processing of the pending Sales Tax refunds and issuance of RPOs.

    The FPCCI Chief appreciated Dr. Abdul Hafeez Shaikh, Advisor to the Prime Minister on Finance & Revenue and FBR for initiating Expeditious Refund System (ERS) for automated payment on generated Refund Payment Orders (RPOs) in the wake of withdrawal of zero-rating on Sales Tax inputs for five export oriented industrial sectors and also appreciated for providing Sales Tax refunds for manufacturing of five export-oriented sector, within 72 hours through Risk Management (RMS), however, lamented for the delay in implementation of these system.

    Related Stories

    FPCCI urges government to resolve issues of small traders

  • Car sales plunge by 42pc in July 2019

    Car sales plunge by 42pc in July 2019

    KARACHI: Car sales have witnessed a sharp decline of 42 percent in July 2019 owing to massive depreciation in local currency and tax measures taken in the budget 2019/2020, analysts said on Monday.

    According to statistics released by Pakistan Automobile Manufacturers Association (PAMA), the car sales were 12,482 units in July 2019 as compared with 21,344 units in the same month of the last year.

    Industry analysts said that the local currency witnessed sharp decline during current calendar year, which hampered the growth in car sales.

    The significant decline was witnessed in cars with engine capacity of 1300CC and above. The sales of this segment fell by 62.6 percent to 3,607 units in July 2019 when compared with 9,659 units in the same month of the last year. The production of this category was also declined to 5,582 units as compared with 9,833 units.

    The sales of small cars with engine capacity of 1,000 CC also fell by 53.73 percent during the period under review. The sales of cars under this category fell to 2,051 units in July 2019 as compared with 4,433 units in the same month of the last year.

    The sales of cars below 1,000 CC, however, increased to 5,310 units from 4,783 units.

  • Karachi traders criticize FBR for not including in consultative committee

    Karachi traders criticize FBR for not including in consultative committee

    Traders associations from Karachi have strongly criticized the Federal Board of Revenue (FBR) for excluding representatives of small traders and shopkeepers from Pakistan’s commercial capital in its newly formed consultative committee on the fixed tax scheme.

    (more…)
  • KCCI managing committee elected unopposed for next two years

    KCCI managing committee elected unopposed for next two years

    KARACHI: All candidates of Businessmen Group (BMG) have been elected unopposed for the Managing Committee of Karachi Chamber of Commerce & Industry for the term 2019-2021.

    According to details, a total of 32 nominations were received by the Election Commission who all belonged to Businessmen Group, a statement said on Saturday

    The nominations papers were scrutinized by the Election Commission, which rejected 10 nomination papers by declaring them invalid whereas 7 candidates withdrew their nomination papers, resulting in unanimous election of the remaining 15 BMG candidates.

    Therefore, all 15 BMGIANs were declared successful in KCCI’s Election 2019-21.

    Siraj Kassam Teli, Chairman Businessmen Group (BMG) and Former President KCCI, on the occasion, expressed gratitude to Almighty Allah and conveyed thanks and compliments to the Business and Industrial community of Karachi for reposing confidence and trust on Businessmen Group.

    Siraj Teli said, “By the grace of Almighty Allah, BMG has been winning all the elections without losing a single seat for the last 22 years and after terribly defeating the opponents in last year’s election with double the votes, BMGIANs have been blessed with an unopposed victory by the Almighty Allah.

    He said that 22 years of success is an acknowledgement of the public service by the Businessmen Group which also testifies that overwhelming majority of Business and Industrial Community endorses the policies of BMG because they understand and believe that BMGians are serving them selflessly for their betterment.

    BMG Chairman hoped that the newly elected BMGians will make all out efforts in espousing the cause of Business and Industrial Community and to further enhance the status of public service which is the motto of BMG.

    The successful BMGians include names of Mohammad Junaid Mundia, Arshad Islam, Agha Shahab Ahmed Khan, Muhammad Altaf Tai, Abdul Samad Shaikh, Atif Jamil ur Rehman, Muhammed Asif, Chaudhry Nasir Abdullah, Ibrahim Mustafa Ahmed Shamsi, Rafiq Muhammad Siddiq, Khurram Ajaz, Ovais Adil, Abdul Rehman Punjwani, Sohail Usman Sheikh and Junaid ur Rehman.

    As the Managing Committee members have been unanimously elected, hence no general election for Managing Committee will be held on September 21, 2019 whereas the election of KCCI’s Office Bearers for 2019-20 is scheduled to be held on Thursday, September 26, 2019 wherein BMG’s candidates Agha Shahab Ahmed Khan for President, Arshad Islam for Senior Vice President and Shahid Ismail for Vice President will be elected unanimously as the Managing Committee comprises of all BMGIANs.

  • Business community condemns Indian illegal action

    Business community condemns Indian illegal action

    KARACHI: The business community has condemned India’s illegal actions, Indian atrocities and violation of rights of Kashmiri people.

    The Federation of Pakistan Chambers of Commerce and Industry (FPCCI), on behalf of entire business community, passed a resolution to condemn India’s illegal actions, Indian atrocities and violation of rights of Kashmiri people.

    It said that India has made breach of all international laws.

    According to resolutions of UNO, Kashmir is a disputed territory and actions taken presently by India are futile.

    “We salute to government and Armed forces for their perseverance and consistent diplomacy in raising the issue,” the FPCCI said.

    Business community of Pakistan whole heartedly expresses the solidarity with people of Kashmir and government as well.

    Pakistan should send delegations to all international forums for raising the voice against this issue, according to the resolution.

    FPCCI should inform to all business communities in the world by sending letters about ongoing Indian atrocities in Kashmir and should apprise to Indian Business community (FICCI), SAARC CCI, ICCIA and Other peace making institutions as well.

    Business community of Pakistan appreciated the role of China, Malaysia, Turkey, Saudi Arabia and OIC for condemning the atrocities and oppressions of India with Kasmiri people.

  • Pak-Afghan Chamber hails decision to open Torkham border round the clock

    Pak-Afghan Chamber hails decision to open Torkham border round the clock

    KARACHI: The announcement of keeping the Torkham border open for 24/7 was highly well-received by the business communities across the border and is surely a step in the right direction, however, it is critical to ensure that upgraded infrastructure and well-equipped & competent staff is in place to tackle the challenges.

    Zubair Motiwala, Chairman, Pakistan-Afghanistan Joint Chamber of Commerce and Industry (PAJCCI) Chairman, appreciated the initiative of Prime Minister with an aim to increase bilateral trade ties between the two countries, but he also iterated that this single step needs to be intertwined with other confidence building measures that should reduce the trust deficit across the border.

    The Border management system, including quick processing at the border, scanning facility in place, appropriate number of manpower with the desired skill set should also be ensured. The congestion and infrastructure challenges at port leading to delays which is further aggravated by dilapidated road conditions also reduces the speed of consignments reaching the border, which needs to be looked into to reap the benefits from this endeavor.

    During a meeting with customs officials, it was highlighted that Torkham border has one gate which is used for the movement of all types of cargo, including Transit, Trade (Import / Export) and Empty Containers that limits the efficacy of border facilitation, this not only increases the time of processing but also creates a backlog.

    The electricity and internet disconnects also cause significant issues as it hampers the operation of WeBoC system, leading to the piling of documents that needs pre-processing for clearance of the consignments. The most critical issue highlighted was limited manpower on the border, which in normal working conditions is also not sufficient.

    Motiwala commented that it is heartening to see that these matters were taken under perspective by the Government and as highlighted during the visit of Chief Minister Mahmood Khan, the arrangement at border for ensuring round the clock functionality were deemed satisfactory. PAJCCI Chairman believed that if these issues are curbed then this investment at the border will surely support enhancement in trade and facilitation of transit.

    He also iterates the need to ensure the same across the border so that the benefits can be achieved mutually through an efficient border system on both the sides.

    Co-Chairman PAJCCI, Khan Jan Alokozai also welcomed the initiative of Pakistan Government to keep the border operational 24/7 and hope to see it replicated at the Chaman and Ghulam Khan borders as well.

  • KCCI seeks 90-day extension for clearance relaxation in printing retail price

    KCCI seeks 90-day extension for clearance relaxation in printing retail price

    KARACHI: Karachi Chamber of Commerce and Industry (KCCI) has urged Federal Board of Revenue (FBR) to extend the relaxation for further 90 days that was given for clearance of imported items without printing of retail price.

    Junaid Esmail Makda, President, KCCI has requested the FBR to extend the relaxation given for clearance of imported items under Third Schedule without printing of retail price or affixing stickers for 90 more days as the import orders were booked in advance for around 3 to 6 months while the packaging of the ordered products was already designed and printed at the initial stage.

    In a letter sent to Chairman FBR Shabbar Zaidi, President KCCI stated that on KCCI’s request FBR gave an extension of just 15 days for the implementation of the said condition but it was too short for importers to fulfill the new requirements and the process still remains incomplete, hence, the relevant notification should be extended for 90 days.

    He was of the opinion that it was not possible to re-print MRP on the old stock while any request of making changes at the eleventh hour are unacceptable to the sellers and spoils the credibility / goodwill of the trader.

    “The MRP cannot be assessed by the importer as they sell their imported goods to dealers who sell to distributors and they subsequently sell to retailers across the country while the end retail price including all the margins was determined afterwards which varies in different cases and cannot be standardized across Pakistan”, he added.

    He said that KCCI has received repeated requests from the importers that they were facing severe problems in meeting the requirements of printing Minimum Retail Price (MRP) on items added under the Third Schedule. In the Finance Act 2019-20, Sales Tax has been imposed at the import stage based on the printed MRP and many new items have been added to the Third Schedule of Sales Tax Act 1990.

    He said that on KCCI’s request, FBR allowed clearance of imported Third Schedule items without printing of retail price or affixing stickers for which goods declaration are filed by 31st July, 2019 subject to the condition that the importer declares retail price for each of the imported items for the assessment of sales tax vide Sales Tax General Order No. 102 / 2019 dated July 15, 2019 to clear the backlog at the ports.

    He reiterated that it is impractical to pre-assess and then print the MRP at import stage on each and every item as a lot of factors affect the retail prices of the products like currency fluctuations, packing style, fragility and size of product, distance from ports &, transportation costs, market dynamics, competition, shelf life, and uncertainties of sale in future especially for seasonal items.

    Hence, Junaid Makda requested to withdraw the condition of printing MRP on imported goods or otherwise, allow MRP of the imported items to be declared on WEBOC along with the Goods Declaration (GD) for tax assessment purposes instead of being printed on each and every imported item. After the imposition of MRP, what will be the status of Import Trade Price (ITP) / Customs Valuation of items in the third schedule which also needs to be clarified, he added.

  • KCCI hails withholding tax exemption to yarn traders

    KCCI hails withholding tax exemption to yarn traders

    KARACHI: Karachi Chamber of Commerce and Industry (KCCI) has hailed the decision of Federal Board of Revenue (FBR) to exempt withholding tax for yarn traders.

    In a statement issued on Monday President KCCI Junaid Esmail Makda appreciated the FBR for holding numerous meeting with KCCI and taking into consideration KCCI’s suggestion pertaining to exemption of withholding tax to yarn traders into consideration as they were overburdened with additional taxes.

    Makda pointed out that under Section 45A of Part IV of the Income Tax Ordinance about Exemption from Specific Provisions, the sales, supplies and services made by traders of yarn to taxpayers from textile & articles, carpets, leather and Articles including artificial leather footwear, surgical goods and sportswear sector will not be subjected to deduction of withholding tax.

    He said that such traders of yarn shall pay 0.1 percent minimum tax on their annual turnover on monthly basis on the 30th day of each month and monthly withholding tax statement shall be e-filed under the provision of section 165 of the Income Tax Ordinance, which was widely being demanded by relevant stakeholders.

    He hoped that misinterpretation and incorrect application of Section 113 of Income Tax Ordinance which was against the spirit of SRO 333 (I) 2011 will not be repeated again and FBR would continue to take more such steps which were badly needed as the loyal taxpayers from different sectors of the economy were facing immense hardships and were finding it hard to continue their businesses because of exorbitantly high cost of doing business which must be brought down to provide a level playing field and make Pakistani goods competitive.

  • UAE announces opening visa centers at Karachi, Islamabad

    UAE announces opening visa centers at Karachi, Islamabad

    KARACHI: United Arab Emirates (UAE) has announced to open visa centers in Karachi and Islamabad this year in order to facilitate Pakistanis, said UAE Ambassador Hamad Obaid Alzaabi.

    UAE Embassy will be opening a visa center in Karachi which will become operational in the first week of September 2019 while another visa center will also become functional in Islamabad in the first week of October 2019 which would provide all facilities here in Pakistan.

    “Everything will be here including the medical insurance, checkups and the contracts etc. to facilitate visa issuance from the visa center in Karachi which will be the biggest visa center of Asia while the entire team for this Visa Center at Khayaban-e-Shamsheer in Karachi will come from UAE”, he added while exchanging views at a meeting during his visit to the Karachi Chamber of Commerce & Industry (KCCI) on Friday.

    Deputy Consul General of UAE Bakheet Ateeq Alremeithi, Chairman Businessmen Group & Former President KCCI Siraj Kassam Teli, President KCCI Junaid Esmail Makda, Senior Vice President KCCI Khurram Shahzad, Vice President KCCI Asif Sheikh Javaid and KCCI Managing Committee members were also present at the meeting.

    While expressing gratitude to KCCI for extending warm hospitality on his visit to KCCI, UAE Ambassador said that he has visited many areas of Pakistan including Faisalabad, Sialkot, Lahore, Peshawar, South Waziristan and Quetta but Karachi was one of the most important cities of Pakistan where social life, atmosphere, culture and people were very different as compared to other areas including Islamabad.

    UAE Envoy stated that relations between Pakistan and UAE have always been very strong and historical but there was a need to further build these relations by exploring the opportunities and potential areas for enhancing trade and investment. “The governments of UAE and Pakistan are working very hard to narrow the gap and find opportunities, chances and potential for trade and investment”, he added.

    “We are trying to find new areas of cooperation where we could work together and also examining the challenging areas so that these could be addressed by the authorities in UAE. Inshallah we will put our hands together to move forward in future”, he added.

    He further informed that UAE was now offering Silver Investment Visa for 5 years and Golden Investment Visa for 10 years which were being issued under a specific criteria and depend on the size of a company and also the amount being invested.

    He stressed the need for having legal framework between UAE and Pakistan to encourage and save investments made either in Pakistan or in UAE.

    Agreeing to President KCCI’s suggestion of signing a Memorandum of Understanding between KCCI and UAE Chamber, he said it was really important so that a framework could be defined because when there was a gap and no official visits, the business communities and Chambers of Commerce simply will have no idea about the business potential in Pakistan and UAE. “Any suggestion from Karachi Chamber which pertains to signing MoUs, agreements, workshops, conferences and seminars will certainly be taken into consideration”, he assured, “We are ready to support you and whatever you need, we are always there at the UAE Embassy and Consulate in Karachi to assist you.”

    Chairman BMG & Former President KCCI Siraj Kassam Teli, in his remarks, appreciated the support and cooperation being extended by UAE’s Embassy and its Consulate in Karachi as they have been fully facilitating KCCI’s visa requests from time to time and they haven’t faced any problems at all in this regard. However, he requested the Deputy Consul General to devise some kind of system in collaboration with KCCI so that visas could be issued to credible businessmen and industrialists with a personal guarantee by KCCI. He informed that Karachi Chamber thoroughly reviews and verifies all the documents being submitted by its members intending to obtain KCCI’s visa recommendation letter so that only genuine businessmen could avail this facility.

    He also requested the Ambassador to only entertain visa recommendation letters and requests from those Chambers of Commerce and trade associations which were legally registered at the Ministry of Commerce. In Pakistan particularly in Karachi, there were a lot of paper-based and bogus forums and Councils etc. which were not legally registered, he noted, adding that in this regard, UAE Embassy can easily obtain a list of all legal Chambers of Commerce and trade bodies along with their jurisdiction details from the Ministry of Commerce that would help in better understanding the legalities and jurisdictions of 42 Chambers of Commerce and around 120 sector-specific trade associations in Pakistan, he added.

    While welcoming the UAE Ambassador, President KCCI Junaid Esmail Makda expressed the intention to sign a Memorandum of Understanding with UAE Chamber in order to improve the trade and investment ties and bring business communities more close to each other. “We should work collectively to enhance bilateral trade and deal with all the irritants and barriers, particularly the non-tariff barriers between the two countries.”

    He said that although tourist visa was being offered without any problem but the UAE government must also look into the possibility of issuing business visas to Pakistan’s business community.

    Junaid Makda informed that around 1.6 million Pakistanis were residing in different cities of UAE. The country received remittance of $4.62 billion from UAE during Fiscal Year 2019, making it one of the most attractive destination for Pakistani workers.

    He said, “Pakistan was going through a very hard time in terms of economic conditions but UAE’s support has been remarkable and we are very grateful for helping Pakistan with $3 billion balance-of-payments support.