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  • Javed Ghani assumes charge of FBR chairman

    Javed Ghani assumes charge of FBR chairman

    ISLAMABAD: Muhammad Javed Ghani has assumed additional charge of chairman Federal Board of Revenue (FBR) on Tuesday after removal of Ms. Nausheen Javed Amjad from the post of FBR chairperson.

    A notification issued by the FBR, Muhammad Javed Ghani, an officer of Pakistan Customs Service BS-22 assumed the additional charge of the post of chairman FBR on July 07, 2020.

    In another notification issued by the FBR stated that Ms. Nausheen Javaid Amjad, BS-22 officer of Inland Revenue Service has relinquished the charge of the post of FBR chairperson with effect from July 07, 2020.

  • Government borrowing from commercial banks rises to Rs2,413 billion in 2019/2020

    Government borrowing from commercial banks rises to Rs2,413 billion in 2019/2020

    KARACHI: The federal government has borrowed Rs2,413 billion from commercial banks during fiscal year 2019/2020 as against retirement of Rs771.6 billion in the preceding fiscal year, according to statistics released by State Bank of Pakistan (SBP) on Monday.

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  • Finance Act 2020: Amended list of persons required to file annual income tax return

    Finance Act 2020: Amended list of persons required to file annual income tax return

    ISLAMABAD: Persons falling under final tax regime are now required to file annual income tax returns. In this regard amendment has been made through Finance Act, 2020.

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  • FBR imposes restriction on deduction of profit on debt payable to associated enterprise

    FBR imposes restriction on deduction of profit on debt payable to associated enterprise

    ISLAMABAD: Federal Board of Revenue (FBR) has imposed restriction on deduction of profit on debt payable to associated enterprise in order to comply with OECD action on profit shifting.

    The restriction has been imposed through introduction of Section 106A of Income Tax Ordinance, 2001 through Finance Act, 2020, recently passed by the National Assembly of Pakistan.

    Tax experts at EY Ford Rhodes Chartered Accountants said that in line with Action Plan 4 of the OECD’s recommendations on Base Erosion and Profit Shifting (BEPS), the new section has been introduced which imposes a restriction on deduction of profit on debt payable to associated enterprise.

    The salient features of the new section are:

    — Deduction of foreign profit on debt in excess of fifteen percent of taxable income before depreciation, amortization and foreign profit on debt shall be disallowed to a foreign controlled resident company (other than an insurance or banking company);

    — The section shall not apply if the total foreign profit on debt claimed as a deduction is less than Rs10 million for a tax year;

    — Where the foreign profit on debt cannot be fully adjusted against the taxable income for a tax year, the excess amount shall be added to the amount of foreign profit on debt for the following tax year and shall be treated to be part of that deduction, or if there is no such deduction for that tax year, be treated as the deduction for that tax year and so on for three tax years following the year in which the foreign profit on debt was claimed as an expense;

    According to FBR sources this section shall apply in respect of foreign profit on debt accrued with effect from the first day of July, 2020, even if debts were contracted before the first day of July, 2020;

  • SECP issues draft professional clearing members regulations

    SECP issues draft professional clearing members regulations

    ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has issued draft Professional Clearing Members (PCM) Regulations, 2020 for public consultation.

    Professional clearing members denotes the concept of a third party independent institution, which will offer custodial and clearing/ settlement services to securities brokers and their customers.

    PCM can be a financial institution, such as a commercial bank, Non-Banking Finance Company etc., or a specialized entity formed for this purpose. PCM will handle the custody and clearing/ settlement functions for brokers that will significantly reduce compliance burden, ensure efficiency in businesses and allow brokers to focus on their key competencies.

    The new regulations will evolve a new business model, which will support ease of doing business, and reduce operational costs.

    The draft PCM Regulations lay down licensing, conduct and operational requirements for PCM which include eligibility criteria, development of important policies and procedures, measures for ensuring customer asset protection and segregation, confidentiality of customer information and compliance with corporate governance requirements etc.

    Earlier, SECP had introduced the concept of categorization of securities brokers and segregation of trading and custodial/ settlement functions, whereby only those brokers which fulfill the eligibility criteria can offer custodial/ clearing services.

    As per the new model, Trading Only brokers can transfer their custody/clearing services to brokers which meet significantly higher eligibility criteria and licensed as Trading and Clearing brokers.

    PCM framework is a crucial milestone in implementing the new broker regime and introducing international best practices. It will mitigate the market risk and further strengthen the custody protection measures to safeguard interest of the investors.

    The draft PCM Regulations are available on SECP website and comments may be shared with the SECP by July 17, 2020.

  • SRB revises sales tax jurisdiction of commissioners

    SRB revises sales tax jurisdiction of commissioners

    KARACHI: Sindh Revenue Board (SRB) on Monday revised jurisdiction of commissioners with effect from July 06, 2020.

    Following is the revised jurisdiction of commissioners:

    Commissioner-I

    Unit 2: Hotels, motels and Guest Houses; restaurants; marriage halls and lawns; caterers; clubs and race clubs; event management services and exhibition services; out-door photographers and videographers; indoor sports and game center: vehicle parking and valet services.

    Unit 4: Business support services; supply chain management or distribution (including delivery) services; call centers; visa processing services including advisory and consultancy services for migration or visa application filing services.

    Unit 5: Ship management services; shipping agents; freight forwarding agents.

    Unit 6: Ship chandlers; stevedores.

    Unit 7: Customs agents.

    Unit 8: Public bonded warehouses; warehouses and depots for storage or cold storage.

    Unit 9: Banks; debt collection services and other debt recovery services provided or rendered by debt collection agencies or recovery agencies or other persons.

    Unit 10: Insurance and re-insurance; insurance agents.

    Unit 11: Non-banking financial institutions and companies; investment banks; investment advisory; fund and asset management; foreign exchange dealer, exchange company, money changer and money exchanger; commission and brokerage on foreign exchange dealings; issuance, processing and operation of credit and debit cards; ATM operations, maintenance and management services.

    Unit 12: stockbrokers, futures brokers and commodity brokers; leasing; modaraba and musharika; share transfer agents; services provided’ or rendered by a registrar to an issue underwriters; credit rating agency.

    Unit 13: Beauty parlors, beauty clinics, smiling clinics or centers and others; healthcare; gyms; physical fitness centers, body massage center; cosmetic and plastic surgery and transplantation; fashion designers; laundries and dry cleaners.

    Unit 32: Terminal operators and port operators; dredging and desilting services.

    Commissioner-II

    Unit 1: telecommunication.

    Unit 15: Security agencies.

    Unit 23: Inter-city transportation or carriage of goods by road or through pipeline or conduit; packers and movers; electric power transmission services.

    Unit 26: Fumigation services; janitorial services; waste collection, transportation, processing and management services, maintenance and cleaning services.

    Unit 28: Legal practitioners and consultants and accountants and auditors; management consultants; software or IT based system development consultants; corporate law consultants; technical, scientific and engineering consultants; other consultants, including tax consultants, human resources and personnel development consultants.

    Unit 29: Auto workshops and authorized service stations; workshop for machinery; workshop for electric or electronic equipment or appliances, etc, including computer hardware; car or automobile washing or similar services stations; car or automobile dealers; services provided or rendered by cab aggregator and services provided and rendered by the owners or drivers of the motor vehicles using the cab aggregator services; rent a car and automobile rental services.

    Commissioner-III

    Unit 3: Contact execution; erection, commissioning and installation services; construction services; ready mix concrete service; contractor of buildings; property developers or promoters; services of mining of minerals and allied and ancillary services in relation thereto; site preparation and clearance, excavation, earth moving and demolition services; architects or town planners; interior decorators.

    Unit 14: Labour and manpower supply services; recruiting agents.

    Unit 19: Advertisement on TV; advertisement on Radio; advertisement on billboards, signboards or digital boards; advertisement on poles; advertising agencies; public relation services.

    Unit 20; Advertising on Cable TV and CCTV; cable TV Operators; other advertisements, including those on Web, Internet, etc.

    Unit 21: Franchise services; intellectual property services.

    Unit 22: Market Research Agency; sponsorship services; Programme producers and production houses.

    Unit 24: Withholding of Sindh Sales Tax.

    Unit 24A: Withholding of Sindh Sales Tax of all offices and departments of Federal, provincial and local or district governments.

    Unit 27: Auctioneers; renting of immovable property services; purchase or sale or hire of immovable property; property dealers; renting of machinery, equipment, appliance and other tangible goods.

    Unit 30: Toll manufacturing or processing; commission agents; indenters’ services.

    Commissioner-IV

    Unit 16: Surveyors; actuarial services; Technical inspection and certification services, including quality control certification services and ISO certification; valuation services, including competency and eligibility testing services.

    Unit 17: Courier services.

    Unit 18: Travel agents; tour operators.

    Unit 25: Technical testing and analysis service; training services; services provided or rendered by laboratories, other than the services relating to pathological, radiological or diagnostic test of patients.

    Unit 31: Airport services, airport operators, chartered flights services.

    Commissioner-V

    Unit 37: All matters related to SWWF and SWPF and other such matters as may be assigned by the Chairman/ Member/ Senior Advisor.

    Commissioner (Sukkur)

    Unit 33: Services provided or rendered in the Civil Division of Sukkur and Larkana.

    Commissioner (Hyderabad)

    Unit 34: Services provided or rendered in the Civil Division of Hyderabad, Shaheed Banazirabad and Mirpurkhas.

    Commissioner (Appeals-I)

    Unit 35: Appeals under sections 57, 58, 59 and 64 of the Sindh Sales Tax on Services Act, 2011, in relation to the orders passed or decisions made by the officers of the SRB in the matters and jurisdiction of the units under Commissioners-I, III, V and Hyderabad.

    Commissioner (Appeals-II)

    Unit 35A: made Appeals under sections 57, 58, 59 and 64 of the Sindh Sales Tax on Services Act, 2011, in relation to the orders passed or decisions by the officers of the SRB in the matters and jurisdiction of the units under Commissioners-II, IV, VI and Sukkur.

    Commissioner (Audit)

    Unit 36: Audit functions under the Sindh Sales on Services Act, 2011, and the rules and notifications issued thereunder. Matters relating to Revenue Receipt Audit, DAC and PAC and jurisdiction of the units under Commissioner-I, III, V & Hyderabad, Revenue reconciliation work and other such matters as may be assigned by the Chairman / Member.

    Unit 36A: Audit functions under the Sindh Sales on Services Act, 2011, and the rules and notifications issued thereunder. Matters relating to Revenue Receipt Audit, DAC and PAC and jurisdiction of the units under Commissioner-II, IV & Sukkur, Revenue reconciliation work and other such matters as may be assigned by the Chairman / Member.

    Where a service provider is engaged in the economic activity of providing or rendering more than one taxable service, as specified in column (3) of the above Table against Unit Nos. 1 to 32 (except Unit 24 and Unit No.24A), as specified in column (2), he shall be placed in the jurisdiction of the Unit, specified in column (2), relatable to the service which is his principal activity as per his registration particulars.

    Where a service provider is engaged in an economic activity in the territorial jurisdiction specified against Unit Nos.33 and 34 but it has its place of business outside such territorial jurisdiction, the officers of the SRB in Unit Nos. 33 and 34, as the case may be, shall exercise concurrent powers and functions with the respective officers of the SRB in Unit Nos.1 to 32 (except Unit No.24 and Unit No.24A).

    Where a service provider is also a withholding agent, the officers of the SRB in Unit No.24 and Unit No.24A shall exercise concurrent powers and functions with the respective officers of the SRB in Unit Nos. 1 to 23 and 25 and 34 in relation to the amounts of Sindh sales tax withheld or liable to be withheld under the provisions of the Sindh Sales Tax Special Procedure (Withholding) Rules of the years 2011 and 2014.

    All the officers of the SRB in Unit Nos. 1 to 34 shall exercise the powers and functions in relation to audit under the Sindh Sales Tax on Services Act, 2011, and rules and notifications issued thereunder, concurrently with the officers of the SRB in Unit No.36 and 36A.

    This issues in supersession of Notification No.SRB-3-4/36/2019 dated 26th November, 2019 and also all other previous notifications / amendments issued in relation thereto.

    This notification shall take effect on and from the 6th July, 2020.

  • Foreign investors express satisfaction on security environment

    Foreign investors express satisfaction on security environment

    KARACHI: The foreign investors operating in Pakistan have showed satisfaction over security environment especially after quick response of law enforcement agency against failed terror attack on Pakistan Stock Exchange (PSX).

    “The smooth and professional handling of the brazen attack on Pakistan Stock Exchange on June 29, and restoring order within a very short time, is a testimony of the OICCI members’ confidence in the ability of the LEAs to professionally combat any threat to life and property in the country, said Haroon Rashid, President Overseas Investors Chamber of Commerce and Industry (OICCI) while commenting on latest findings of security survey,

    OICCI is the largest chamber in terms of economic contribution and representing top 200 foreign investors in Pakistan, has released the results of its latest Annual Security survey 2020, covering feedback on the security environment from July 2019 to June 2020.

    Overall, the foreign investors have shown high level of satisfaction on the fast improving security environment and have also appreciated the performance of law enforcement agencies (LEAs) in the main business centers of Pakistan, Karachi and Lahore, raising the security satisfaction profile of the two cities and bringing them at par with other megacities in the region.

    The OICCI President said: “Foreign investors are not deterred by isolated incidences and continue to take a holistic view of the operating environment, which, OICCI members perceive to be highly positive showing continuous improvement.”

    The survey respondents included CEOs and senior management of member organizations, and was participated by 70 per cent of the OICCI’s 200 members, who belong to 35 countries and operate in 14 key sectors of the economy in Pakistan.

    It may be noted that over two third of the OICCI members have their head offices in Karachi with operations all over country. The survey was conducted from May 15th till June 22nd.

    OICCI 2020 Security Survey indicates that the foreign investors, overall, are impressed with further improvement in the security environment over the past twelve months, since July 2019, especially in Karachi and Lahore, with noticeable improvement in other business centers as well.

    While giving assessment of the overall security situation, 60 percent of the respondents have reported improved security environment for own and Customer’s Business, as well as for their respective suppliers and employees.

    Irfan Siddiqui, OICCI Vice President pointed out: “this improvement is over and above the already improved security environment last year, and the continuous improvement recorded in the OICCI members annual security surveys since 2015.”

    He further added that It is highly encouraging that despite many disruptions during the past twelve months, due to Azadi March in December 2019, border tension with India during Q3 2019, and subsequent travel restriction since end March 2020 due to COVID 19, the visit of foreign nationals visiting Pakistan for OICCI members business, pre COVID 19, showed a healthy increase, as over 40 percent respondents reported more visitors than last year, with 26 percent hosting more than 50 visitors and most respondents getting between 20 and 50 visitors.

    The foreign business visitors were mainly from China, UK, USA, UAE, as well as other European and Asian countries.

    Due to the sustained improvement of the security environment, OICCI members reported that over 90 percent of the Board and management meetings of their Pakistan business operations, involving HQ and/or Regional Management, were held within the country.

    In terms of serious crimes, 87 percent respondents indicated a decrease over last year in Karachi and Lahore. However, the survey respondents have expressed concern on the increasing trend of street crimes.

    All in all, 37 percent respondents in Karachi and 27 percent in Lahore reported concern on increasing street crimes.

    According to the results Islamabad experienced the lowest increase in street crimes among the key business centers.

    There was also a thumbs up for the LEAs as, by and large, the foreign investors were satisfied with the performance of Law Enforcement Agencies, with over 90 percent expressing satisfaction in their interactions with Karachi and Lahore Police, Sindh Rangers, Punjab Police and CPLC and 84% for Sindh Police.

    OICCI Security survey is very comprehensive and gives a detailed feedback of a large number of foreign investors operating in Pakistan on various aspect of doing business connected with security and its impact on their operation which is regularly sought by diplomats and security professionals.

    Established in 1860, Overseas Investors Chamber of Commerce and Industry (OICCI), is the largest Chamber of Commerce in Pakistan based on economic contribution in the form of taxes and investment by its members and is the collective voice of over top 200 foreign investors in Pakistan, including over 50 Fortune 500 companies, who contribute about one third of the total tax collection in the country and a significant portion of the GDP.

    Coming from 35 countries and working in 14 key sectors of the economy, OICCI members are leaders not only in economic activities and investment but are also thought leaders in transfer of technology and in CSR activities.

  • Equity market gains 151 points to follow global stocks

    Equity market gains 151 points to follow global stocks

    KARACHI: The equity market gained 151 points on Monday to observe positive streak and follow international market movement.

    The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 35,203 points as against 35,051 points showing an increase of 151 points.

    Analysts at Arif Habib Limited said that the market went up 187 points during the session and made a comfortable close above 35200 level.

    E&P, OMC, Cement and Pharma sectors performed well. Although profit booking was also observed in Pharma sector.

    Fertilizer sector bore price loss on the back of profit booking. Among Chemical sector, both LOTCHEM and EPCL performed well with LOTCHEM closing at upper circuit.

    Technology sector led the volumes with 66.8 million shares, followed by Chemical (48.7 million) and Cable (39.2 million). Among scrips, TRG did 37.7 million shares, followed by PAEL (37.6 million) and LOTCHEM (30.8 million).

    Sectors contributing to the performance include E&P (+40 points), Cement (+34 points), Pharma (+26 points), O&GMCs (+26 points) and Autos (+18 points).

    Volumes increased from 175.7 million shares to 332.2 million shares (+89 percent DoD). Average traded value also increased by 66 percent to reach US$ 67 million as against US$ 40.4 million.

    Stocks that contributed significantly to the volumes include TRG, PAEL, LOTCHEM, MLCF and JSCL, which formed 40 percent of total volumes.

    Stocks that contributed positively to the index include PPL (+16 points), PSO (+16 points), INDU (+14 points), GLAXO (+10 points) and TRG (+10 points). Stocks that contributed negatively include HUBC (-40 points), DAWH (-34 points), FFC (-18 points), BAFL (-7 points), and PTC (-6 points).

  • SBP expands refinance facility for health sector to combat COVID-19

    SBP expands refinance facility for health sector to combat COVID-19

    KARACHI: The State Bank of Pakistan (SBP) on Monday expand the refinance facility at lower rates for health sector in order to combat COVID-19.

    On March 17, 2020, SBP introduced a refinance scheme, titled Refinance Facility to Combat Covid-19 (RFCC), to support the hospitals and health sector for providing services to directly fight against Covid-19.

    Under this scheme, banks provide concessional loans at a maximum end-user rate of 3 percent for 5 years for hospitals and medical centers to purchase medical equipment and set up isolation wards for developing capacity and supporting the health sector in fight against COVID-19.

    Since its inception up till 2nd July 2020, Rs 6.4 billion of concessional credit have been approved for hospitals and other eligible facilities to fight COVID-19.

    Keeping in view the encouraging response and the potential to help developing the health facilities in the country, SBP has now expanded the scope of this refinance facility further.

    The scheme now allows manufacturers of protective gears and equipment, including items such as masks, dresses, testing kits, hospital beds, ventilators etc. to avail financing under RFCC.

    Moreover, to cope with the rising needs of the health facilities in general in the country, SBP has allowed hospitals serving patients even other than COVID-19 to avail this facility.

    Refinance facility will be available for setting up or expansion of the existing hospitals fulfilling minimum specified standards.

    For setting up new hospitals under this scheme, payments will be released by the banks on completing relevant milestones.

    RFCC is highly subsidized facility where SBP provides refinance to banks at 0% whereas banks can keep a maximum margin of 3%. Some of the banks treating this as part of their CSR are keeping margins very low.

  • Rupee weakens by 51 paisas on import, corporate demand

    Rupee weakens by 51 paisas on import, corporate demand

    KARACHI: The Pak Rupee ended down by 51 paisas against the dollar on Monday owing to higher demand for import and corporate demand.

    The rupee closed at Rs166.72 to the dollar from last Friday’s close of Rs166.21 in interbank foreign exchange market.

    Currency experts said that the market was opened after two days weekly holidays which escalated the demand for dollar.

    They said that the due to ease in lockdown the activities in foreign trade had been increased. The importers were placing orders in the international markets.

    The experts hoped that the recent inflows from international financial institutions the rupee may recover.

    The foreign exchange reserves of the country increased by $1.24 billion to $17.97 billion by week ended June 26, 2020, State Bank of Pakistan (SBP) said on Thursday.

    The foreign exchange reserves of the country were at $16.73 billion by week ended June 19, 2020.

    The official foreign exchange reserves of the SBP increased by $1.27 billion to $11.231 billion by week ended June 26, 2020. The official reserves of the central bank were at $9.961 billion a week ago.

    The SBP said that during the week ended June 26, 2020, the central bank received around $2,046 million official inflows, including $737 million from World Bank, $503 million from Asian Development Bank, $500 million from Asian Infrastructure Investment Bank and $300 million as GOP loan disbursement from China.

    After incorporating government external debt payments of $ 809 million, SBP reserves increased by $ 1,270 million to $ 11,231 million.

    During the current week, SBP has received additional $1,000 million as GOP loan disbursement from China.

    These funds will be part of SBP weekly reserves data as of July 03, 2020 to be released on July 09, 2020.