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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.

  • Finance Bill 2019: tax officials granted powers to enter premises for gold, prize bonds; KCCI opposes

    Finance Bill 2019: tax officials granted powers to enter premises for gold, prize bonds; KCCI opposes

    KARACHI: The Finance Bill 2019 has proposed discretionary powers to Commissioner Inland Revenue to enter and search any premises for undeclared gold and prize bonds.

    Under Section 175 of Income Tax Ordinance, 2001 such powers have already with the commissioners but the proposal intended to expand the power to include gold and bearer security.

    Karachi Chamber of Commerce and Industry (KCCI) has opposed strongly to this recommendations saying that this is against the dignity granted to an individual as per the Article 14 of the Constitution and would tantamount to violation of sanctity of residential premises, if raided.

    A research report of the KCCI said that raiding of homes and subsequent breach of privacy is against national cultural norms and is an idea uncalled for, having grave social repercussions.

    “This proposal is also against the spirit of withdrawal of discretionary powers of the taxman.”

    The Asset Declaration Scheme 2019 also does not allow declaration of gold, precious stones, bearer security and bearer prize bonds, thereby restricting a holder of such assets from declaring them before probable confiscation. Any such measure before allowance of declaration makes this a very harsh measure.

    Such sweeping discretionary powers granted to the Commissioner would result in harassment to ordinary citizens including housewives and the elderly, as now raids could be made on homes as well, and by no means should be allowed to be confiscated.

    Hence, this proposal should be removed from the budget. Further, the Asset Declaration Scheme 2019 should be amended to include declaration of gold and bearer securities.

  • Prime Minister assures business community of considering sales tax zero rating

    Prime Minister assures business community of considering sales tax zero rating

    KARACHI: Prime Minister Imran Khan has assured business community of considering restoration of sales tax zero rating for export sector.

    A delegation of Federation of Pakistan Chambers of Commerce and Industry (FPCCI) met Prime Minister Imran Khan on Thursday in Islamabad to discuss anomalies in the Finance Bill 2019.

    On FPCCI demand of restoration of SRO 1125(I)/2011 allowing five export oriented export sectors at zero rate, the prime minister assured to consider it sympathetically, said a statement issued by the FPCCI.

    The FPCCI delegation was led by S.M. Muneer, leader of the business community and Former Chief Executive TDAP and Former President, FPCCI and consisting of Aqil Karim Dhedi; Engr. Daroo Khan Achakzai, President, FPCCI and Zubair F. Tufail, Convener of the FPCCI Budget Advisory Council – held a detailed meeting with the Prime Minister Imran Khan and Abdul Hafeez Shaikh, Advisor to the PM on Finance which lasted for 2 hours and discussed / briefed them about the hardships of the business community emanated from some harsh measures of the Finance Bill, 2019 that would give serious blow to trade and industry, especially export sector in the wake of exorbitant policy rate of 12.25 percent coupled with the massive devaluation of Pak-Rupee versus dollar in the last few months withdrawal of zero rated regime from export industrial sectors etc.

    The FPCCI delegation particularly emphasized and discussed ten major demands out of which eight proposals have been accepted by the Prime Minister, the major one such as doing away with raid on any premises; reduction in tax rates for service sector; routing taxation and business related policy through Federal Government/Cabinet instead of FBR, as directed by the Supreme Court; lack of personal interaction and minimal possibility of abuse of discretionary powers by the tax officials; conduction of audit once in a three years etc.

    Moreover the issues of retailers, wholesalers and real estates were also discussed in details.

  • Small traders decide to strongly resist FBR’s raids

    Small traders decide to strongly resist FBR’s raids

    KARACHI: Small traders have decided to resist strongly any move of the Federal Board of Revenue (FBR) to raid markets and business premises.

    An emergent meeting of All Karachi Tajir Ittehad on Wednesday rejected enforcement plan of the tax machinery to raid markets and shopping centers for identifying new taxpayers.

    “The trade community will resist strongly against any raids and all such places will be made ‘no go areas’ for FBR officials,” it is decided at the meeting.

    Atiq Mir, leader of the trade community, said that the tax system of the country cannot be changed overnight.

    He said that the trade community would strongly protest against the corrupt officials of the FBR. “The government is not using tax money for development but it is used for debt repayment and interest payment,” he added.

    Other participants have suggested reforms in the present tax system. The present tax system is promoting corruption and giving further discretionary powers to tax officials would make the tax system more complicated.

    The traders suggested that the tax exempt income should be increased from Rs400,000 to Rs1.5 million. Further the turnover for sales tax registration requirement should be enhanced from Rs5 million to Rs50 million.

    The e-filing of returns should be restricted to limited companies. They said that the random audit was promoting corruption, which should be either abolished or replaced with a better system.

    They suggested that essential items should be exempted from sales tax.

    The traders assured the government that if their demands are accepted then not only revenue would increase but around one million return filers would also come into tax net.

  • Karachi Chamber opposes CNIC condition on supplies

    Karachi Chamber opposes CNIC condition on supplies

    KARACHI: Karachi Chamber of Commerce and Industry (KCCI) has opposed the requirement of Computerized National Identity Card (CNIC) details to be provided by suppliers of unregistered buyers.

    In a statement issued on Wednesday, the KCCI said that through an amendment to Section 8 (Sub-Sec.1, Clause M) of Sales Tax Act 1990, it is now mandatory for the supplier of goods to provide CNIC number of unregistered buyer of raw materials and finished products, effectively placing the responsibility to identify non-filers on the shoulders of compliant taxpayers.

    It was pointed out that with a dismally narrow tax base of Sales Tax registered persons comprising hardly 35000 in number, it is virtually impossible for the importers, manufacturers and suppliers of goods to find registered buyers or those willing to provide their CNIC details.

    Consequently the inventories of unsold goods with traders, stockists, importers and manufacturers are piling up, blocking their entire working capital as well as the funds borrowed from banks.

    The overnight change has put entire trade and industry in a quandary as to whether or not to continue in business because it is simply not possible to find registered buyers or those willing to provide their CNIC.

    KCCI and other trade bodies are overwhelmed with complaints from traders, importers, manufacturers and dealers to take up this serious issue with Finance Ministry and FBR to find a workable solution immediately to pre-empt a crisis within the trade and industry, he added.

    President KCCI Junaid Makda, therefore, urged the Advisor to Prime Minister on Finance, Revenue & Economic Affairs Dr. Hafeez Shaikh and Chairman Federal Board of Revenue (FBR) Shabbar Zaidi, to review the provision of CNIC, taking into account the ground realities of Pakistan’s economy and withdraw the condition to provide CNIC details of unregistered buyers in Sales Tax Invoices as it is not possible to comply with the condition with immediate effect.

    He further urged the authorities to defer the proposed measure for at least one year so as to facilitate a gradual transition from current procedure and to help release the working capital of entire supply chain which is currently blocked.

    Already the economic activities are very slow and such measures will further aggravate the situation.

    Since the Chairman FBR has formed the anomaly committee which includes representatives of business community, the matter will also be raised with the meetings of committee along with other major anomalies which exist in the Budget 2019-20, he assured.

  • FPCCI may opt harsh decisions against proposed budgetary measures

    FPCCI may opt harsh decisions against proposed budgetary measures

    KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) on has announced to take harsh decision against duty and tax measures proposed through Finance Bill, 2019.

    At a pressing briefing on Wednesday, Engineer Daroo Khan, President, FPCCI said that the decision would include closure of business and trade activities in protest.

    He said that the business community would share its reservations with the government. If the government declines to accept demands then option to protest is open, he added.

    The FPCCI president said that budgetary measures had would create hardship for all including business community as well as general public.

    The national chamber has identified many reservations on the budget 2019/2020. The apex chamber has constituted a committee on the Finance Bill, 2019.

    Engr. Daroo Khan demanded the government to restore sales tax zero-rating for export sector. Further, he pointed out that hike in tariff of gas and electricity would also make difficult for business to continue.

    He suggested the government that if it had been decided to abolish the zero rate regime then there must be assurance of releasing refunds.

    He also demanded the government to restore provision of audit once in three years as Finance Bill proposed to empower tax officials to conduct audit of a taxpayer any or every year.

    S M Muneer, leader of business community, however, said that the business community would not protest without meeting with government authorities.

    He said that a delegation of FPCCI would hold talk with Dr. Abdul Hafeez Shaikh, advisor to Prime Minister on Finance and Revenue on June 20.

    Muneer said that massive depreciation of Pak Rupee had created difficulties for businesses.

    Zubair Tufail, former FPCCI president, said that the proposed budget would encourage smuggling of goods.

    He said that banks should be asked for instant processing of refunds in case the zero-rating was abolished.

    Mirza Ikhtiar Baig, business leader, said that the business community was meeting with people in the government and opposition.

    He said that a delegation of Pakistan Peoples’ Party headed by its chairman Bilawal Bhutto Zardari was visiting FPCCI on June 22, 2019. But we are meeting first with the government tomorrow (June 21), he added.

  • Business community wants secrecy of information under assets declaration scheme

    Business community wants secrecy of information under assets declaration scheme

    KARACHI: Business community has urged Federal Board of Revenue (FBR) to keep information secret under assets declaration scheme in order to ensure confidence of declarants.

    Saleem Parekh, Chairman Site Association of Trade and Industry, urged that all the information disclosed must be kept in secret and should not be shared with any other department. “The scheme will only be successful if no questions are asked with regard to the transactions,” he said at an awareness seminar on Asset Declaration Scheme organized at the association.

    On the instructions of Chairman FBR Shabbar Zaidi, FBR officials have started awareness campaign in Karachi. In this regard Maqsood Jehangir, Commissioner IR, Large Tax Paying Units (LTU) and Kashif Hafeez (Addl. CIR, Zone 6, CRTO, Karachi) visited SITE Association of Industry which was attended by Executive Committee and large number of industrialists.

    Kashif Hafeez gave detailed presentation about Asset Declaration Ordinance 2019 wherein he highlighted the incentives announced by the government that anyone under this scheme can declare their un-declared assets (immovable and moveable) and in this regard all FBR officials would help the business community.

    Commissioner informed that under this scheme all information would be kept secret to safeguard the concerns of business community.

    He informed that government has received detailed financial information from 26 countries and now it is impossible to hide moveable and immoveable assets. Therefore FBR is encouraging all stakeholders to declare their un-disclosed assets obtained before June 30,Bu 2019.

    Saleem Parekh appreciated the presentation and insight knowledge of Commissioner. He said that Commissioner has responded each and every question of the industrialists with clarity which shows his authoritativeness on the subject.

    He also appreciated the efforts of government to document the economy and extended his full support on behalf of members of SITE Association of Industry in this regard.

  • KCCI seeks three month deferment for implementing unregistered buyers’ details

    KCCI seeks three month deferment for implementing unregistered buyers’ details

    KARACHI: Karachi Chamber of Commerce and Industry (KCCI) on Monday urged the government to defer implementation of obtaining information of unregistered buyers.

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  • Karachi Chamber highlights budget anomalies, urges rectification

    Karachi Chamber highlights budget anomalies, urges rectification

    KARACHI: President Karachi Chamber of Commerce & Industry (KCCI) Junaid Esmail Makda, while highlighting various Sales Tax and Income Tax anomalies unveiled in the Federal Budget 2019-2020, appealed Prime Minister Imran Khan, State Minister for Revenue Hammad Azhar and Chairman FBR Shabbar Zaidi to rectify all these anomalies on top priority prior to seeking approval of the Budget from the parliament.

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  • Protest on June 10 against plan to abolish zero-rate sales tax

    Protest on June 10 against plan to abolish zero-rate sales tax

    KARACHI: Textile value added sector has announced to stage protest on Monday June 10, 2019 against proposed plan to abolish sales tax zero-rating for export sector.

    Muhammad Jawed Bilwani, Chief Coordinator for Five Zero Rated Export Sectors in a statement on Saturday said that the exporters and manufacturers would stage peaceful protest outside the Karachi Press Club and would also hold a press conference to explain the negative impact of this proposed plan.

    The government reportedly decided in principle to abolish zero rating for five export oriented sectors especially for textile from the next budget 2019-2020.

    According to estimates prepared by the FBR, the total value of domestic and exports stood at Rs3 trillion out of which approximately Rs1.2 trillion was exported while remaining share of Rs1.8 trillion being consumed into the country.

    The rate of GST might be less than 17 percent as the FBR considers that the higher rate at initial stage would create more problems so the rate might be fixed lower than the standard rate.

    Earlier in a joint press conference on May 28, 2019 the Chairmen of Value Added Export Sector Associations stated that discontinuation of zero rated status will result in ruin and disaster of export oriented industries, flight of capital, mass unemployment and huge foreign exchange losses.

    It will also lead to corruption in connivance with dubious FBR officials under the mode of flying invoices, over invoicing, frauds in refunds etc.

    Further, due to significant volumes of liquidity being stuck in the form of sales tax refunds, export growth will be severely affected and we may even witness a decline in exports.

    More than 200 billion rupees of exporters in Refunds of Sales Tax, Customs Rebate, Withholding Tax, DLTL & DDT are already held up with Government.

    They also conveyed serious apprehension on proposed abolition of Final Tax Regime (FTR) for exporters.

    The Chairmen and Representatives of Council of All Pakistan Textile Mills Associations, Pakistan Apparel Forum, Pakistan Hosiery Manufacturers & Exporters Association, Pakistan Textile Exporters Association, Pakistan Bedwear Exporters Association, Towel Manufacturers Association of Pakistan, Pakistan Cloth Merchant Association, Pakistan Knitwear and Sweater Exporters Association, Pakistan Denim Manufacturers & Exporters Association, All Pakistan Textile Processing Mills Association, Pakistan Readymade Garment Manufacturers & Exporter Association, Pakistan Cotton Fashion Apparels Manufacturers & Exporters Association, The Surgical Instrument Manufacturers Association of Pakistan, Pakistan Leather Garments Manufacturers & Exporters Association, Pakistan Tanners Association, Pakistan Sports Goods Manufacturers & Exporters Association, Pakistan Carpet Manufacturers & Exporters Association, All Pakistan Bedsheets & Upholstery Manufacturers Association have fervently appealed to continue the Zero-Rating Scheme in the national interest to uplift exports. The five zero rated sectors are already documented and contribute 70% of total Nation’s exports and generate 50% of total Nation’s employment.

    They added that collecting sales tax and then refunding – is a futile exercise which creates hassles for exporters and also opens flood gates of corruption. No collection and no refund of sales tax from five zero rated export sectors is a tried and tested formula for increasing revenue and exports. We must not forget that during last two decades the Government had tried to undo zero rating twice but miserably failed, hence, zero rating was reintroduced. The zero rated scheme, in consultation with stakeholders, can further be improved for much better outcome.

    They added that the Government rather than involving in futile exercise of collecting sales tax and then refunding should focus its energy on increasing the number of taxpayers. According to FBR, in year 2017 number of active taxpayers was only 1.13 million only (0.51% of total population).

    They warned that Government’s attempt to collect interest free money in shape of sales tax will put the country’s export at stake. Today, in this period of worst economic crisis, can we afford to do away with zero rated status for the five export oriented industries? they questioned. They cautioned that if the Zero-Rating Scheme is discontinued, 30 percent of the export will decline in first year. They urged the Government to broaden the tax-base rather than burdening the existing tax-payers and documented sectors of the economy.

    Pakistan rupee has been devalued approx. 20.16 percent against dollar from 123.6 to 149.07 in just 9 months. Such state of affairs when the dollar is appreciating and banks are also reluctant to fix dollar rates, the Textile Exporters will be aggrieved in case of BMR because some machineries are delivered in 6 to 8 months and cost of machinery is increased to 20% during the period. Previously, on assurances of the Government to continue zero rating, exporters made huge investment in shape of BMR.

    They articulated that the Government focused on enhancing exports and identified the Five Zero-Rated Export Sectors as the main engines of growth for this purpose whereby Power Division vide Notification SRO12(I)/2019 dated 1st January, 2019 has revised the power tariff for zero rated industrial consumers to net 7.5 cents / kwh and OGRA vide Notification dated 18th October 2018 has been fixed Gas tariff for Registered Manufacturers or Exporters of five Zero-Rated sectors and their Captive Power to Rs600/- per MMBTU but discontinuation of zero rating status from the five export sector will put all the hard efforts of the government in vain.

    The Federation of Pakistan Chambers of Commerce & Industry, Karachi Chamber of Commerce & Industry, Lahore Chamber of Commerce & Industry, Faisalabad Chamber of Commerce & Industry & Sialkot Chamber of Commerce & Industry have also supported the stance and demand of Value Added Export Sector Associations to continue zero-rating scheme for the betterment of economy and export enhancement.

  • Any duty increase on beverages to result in industry closure: Siraj Teli

    Any duty increase on beverages to result in industry closure: Siraj Teli

    KARACHI: Siraj Kassem Teli, director of Pakistan Beverage Limited (Pepso Co. franchisee), while using platform of Karachi Chamber of Commerce and Industry (KCCI) raised voice against government’s proposed plan for implementing excise duty on beverage industry.

    Teli, who is also chairman of Businessmen Group (BMG) and former President of KCCI, warned the government against hike in duty on beverage industry and said that any such action would lead not only to closure of the industry but also resulted in mass unemployment.

    In a letter sent to Prime Minister Imran Khan, while referring to the ongoing buzz in the media and government circles about additional and new taxes including health tax and water surcharge being imposed in the next budget on beverage industry, he stated that this industry is already paying Rs100 billion to the national exchequer by way of output tax through FED and Sales Tax while the net revenue collection by the government comes to around Rs60 billion per annum which is apart from income tax, with-holding taxes, super tax and other provincial taxes.

    He pointed out that over the years, beverage industry and its products have become a necessity of life as many Pakistanis do not have access to pure drinking water and this industry is providing them safe water and other beverages produced with state of the art machinery by strictly following global hygienic standards.

    “We understand that the country is in dire need of additional revenue but one should realize that this new revenue must come from new sources and even if it is taken from old sources then it needs to be justified according to their capacity to pay otherwise it may jeopardize the existing revenue”, Siraj Teli stressed, adding that the Beverage Industry is already heavily taxed and if more burden is put on the industry, its growth, which is already in a declining mode in the first quarter, may suffer more.

    He said that the cost of doing business has already gone up due to other import/ regulatory duties and upsurge in dollar rate etc. while as this industry produces consumer products, more burden will be passed on to the consumers.

    Chairman BMG cautioned that there is a high chance that the imposition of new taxes may lead to closure of the industry resulting in jobs losses of hundreds of thousands of people across Pakistan, besides hampering Prime Minister’s efforts to bring more foreign investment to Pakistan because of such anti-business measures.

    He elaborated that this is an industry where supply side of economics should follow where more revenue is generated with growth, wherein taxes are reduced along with consumer prices that would lead to quantum growth and appreciation in net revenue as well. Any proposal to increase taxes will reverse the growth and it would start declining, ultimately reducing the revenue already being achieved from the Beverage Industry and above all high taxes are incentive for evasion, he added.

    Siraj Teli was of the opinion that today’s policy is actually shrinking the economy whereas the Government should have imposed a complete ban for one or two years on luxury items such as cars etc. and on those items which are being manufactured in Pakistan along with such food items without which we can survive.

    “Also controlling inflation by increasing interest rates has a negative impact on new investment and industry. The solution lies in more industrialization only”, he added.

    He said, “We at Pakistan Beverage Ltd. are in this business since the inception of Pakistan and are the highest tax payer in the Beverage and Food Industry for the last 40 years.

    “We believe in a prosperous Pakistan, we believe in paying due taxes and we are there to help and support your initiatives.

    “However, unjustified and excessive taxation will result in closure of the industry and put a significant dent in the existing revenue that is being collected by the government.

    “This will also result in reduction of employment of hundreds of thousands of job across Pakistan in the industry along with the allied retail businesses.”