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Stock market gains 315 points amid thin volumes

KARACHI: The stock market gained 315 points on Tuesday amid thin volumes because of fiscal year end.

The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 34,053 points as against 33,738 points showing an increase of +315 points.

Analysts at Arif Habib Limited said that the market followed the momentum made yesterday.

Traded volume remained thin as have been the case in the past couple of sessions, mainly due to financial year end marked to market valuation of portfolio scrips by institutional investors.

Among E&P Stocks, OGDC came in limelight with price gains, which was aided by an upward move in international crude oil prices. Similarly, PSO also witnessed price gains during the session.

Banking sector stocks also traded largely in the positive territory. Technology sector stocks topped the volumes with 20.9 million shares, followed by Cement (15.5 million) and Chemical (14.2 million).

Among scrips, TRG led the volumes with 11.8 million shares, followed by UNITY (11 million) and MLCF (6.9 million).

Sectors contributing to the performance include E&P (+68 points), Cement (+38 points), O&GMCs (+35 points), Power (+29 points) and Banks (+27 points).

Volumes declined from 161.2 million shares to 160.6 million shares (-0.8 percent DoD). Average traded value also declined by 9 percent to reach US$ 33.5 million as against US$ 36.5 million.

Stocks that contributed significantly to the volumes include TRG, UNITY, MLCF, PAEL and PRLR1, which formed 26 percent of total volumes.

Stocks that contributed positively to the index include OGDC (+36 points), HUBC (+29 points), FFC (+22 points), TRG (+20 points) and MEBL (+19 points). Stocks that contributed negatively include ENGRO (-10 points), PAKT (-8 points), PMPK (-5 points), BAHL (-5 points), and THALL (-5 points).

June 23, 2020
Rupee plummets by Rs1.06 on dollar demand for import payments

KARACHI: The Pak Rupee fell Rs1.06 against dollar on Tuesday owing to higher import and corporate demand.

The rupee ended Rs167.65 to the dollar from previous day’s closing of Rs166.59 in interbank foreign exchange market.

Currency experts said that the rupee was under pressure due to high demand for corporate and import payments. They said that due to fiscal year closing the corporate sector repatriate their profits to their parent companies abroad.

They said that the scheduled repayment of foreign loans also put pressure on foreign exchange reserves.

However, the reserves slightly increased last week.

The foreign exchange reserves of the country have increased by $70 million to $16.775 billion by week ended June 12, 2020.

The foreign exchange reserves were at $16.705 billion by week ended on June 05, 2020.

The foreign exchange reserves held by the central bank increased by $11 million to $10.107 billion by week ended June 12, 2020 as compared with $10.096 billion a week ago.

June 23, 2020
Sindh exempts sales tax on life insurance service

KARACHI: Sindh government has exempted sales tax on services provided by life insurance companies for full fiscal year i.e. July 01, 2019 to June 30, 2020.

Sindh Revenue Board (SRB) issued notification No. SRB-3-4/13/2020 dated June 22, 2020 stated that the Sindh government had granted exemption to the life insurance services (other than its related re-insurance services), classified under tariff heading 9813.1500 of the Second Schedule to the Sindh Sales Tax on Services Act, 2010, from whole of the sales tax payable thereon, as were provided or rendered during the period from July 01, 2019 to June 30, 2020.

However, the relaxation is subject to following conditions:

(a) the person providing or rendering life insurance services commences e-depositing, in the Sindh government’s head of account in the prescribed manner, the amount s of Sindh sales tax due, on such services for the tax periods from July 2020 onward; and

(b) the amounts of Sindh sales tax charged or collected, if any, on such services during the period from the 1st day of July, 2019 to the 30th June, 2020, are e-deposited, by the person providing or rendering such services, in Sindh Government’s head of account “B-02384” in the prescribed manner by the 15th day of July, 2020.

This notification shall not entitle any person, whether a service provider or a service recipient, to any refund or adjustment of tax, the SRB added.

June 23, 2020
German financial institution shows interest to acquire 20pc stake in TPL Insurance

KARACHI: A Germany based development finance institution has shown interest to acquire 20 percent stake in TPL Insurance Limited, a statement said on Tuesday.

According to an announcement on Pakistan Stock Exchange (PSX), TPL Insurance Limited (“the Company”), a subsidiary of TPL Corp Limited, is pleased to announce that DEG – Deutsche Investitions- und Entwicklungsgesellschaft mbH (“DEG”), a wholly owned subsidiary of KfW Group based in Cologne, Germany, a major development finance institution, has expressed interest in acquiring 20 percent stake in the Company.

The transaction shall be executed subject to approval of the Board of Directors’, Shareholders’, Securities and Exchange Commission of Pakistan and other regulatory bodies.

DEG is re-entering into the Pakistani market with the investment being a first, in an insurance company by a Development Finance Institution in recent times in Pakistan.

With the experience and expertise of DEG as a major institutional investor, the Company will greatly benefit in terms of custom shaped solutions in all respectable areas including but not limited to best corporate governance practices, business support, risk management and environmental and social matters.

“We shall keep our shareholders updated with respect to this transaction by making further announcements as and when the transaction progresses further,” the announcement said.

June 23, 2020
Restoration of multiple years audit to burden taxpayers

KARACHI: Business community has criticized the government for eliminating condition of conducting audit once in three-year period.

Overseas Investors Chamber of Commerce and Industry (OICCI) highlighted anomalies in the Finance Bill 2020, sent to the Federal Board of Revenue (FBR) and said that omission of the condition would burden the taxpayers and would give sweeping powers to tax officials.

The Finance Act 2018 restricted the frequency of conducting audits to once in a three-year period.

This amendment of 2018 demonstrated the confidence of the Government on the records maintained by registered persons.

The Bill now seeks to omit the condition of conducting the audit once in a three-year period. If passed, this will unnecessarily burden taxpayers, while handing over sweeping powers to the assessing officers of Inland Revenue to conduct audits covering one or multiple tax years with no reprieve for the taxpayer available under the law, in absence of any prescribed limitation.

The consequence of this change will likely erode the taxpayer’s confidence in the revenue machinery and the probable unnecessary wastage of time and effort by the revenue authorities.

The OICCI said that during the FBR/OICCI Web link meeting on May 5th the FBR Member (IR-Operations) informed that new Audit Policy will be announced soon, where there will be only one audit in three years u/s 122, which was welcomed by OICCI members.

Therefore the removal of condition of one audit in three years in the Finance Bill 2020, is a shock for OICCI members.

“Hence, we strongly advocate maximum of one for audit within three years, for promoting Ease of Doing Business,” the OICCI said.

June 23, 2020
Foreign investors express concerns on proposed rates for imported raw materials

KARACHI: Foreign investors have raised concerns over the proposed tax rates on import of raw materials.

Overseas Chamber of Commerce and Industry (OICCI), which is represented of foreign investors and multinational companies in Pakistan, highlighted anomalies in the Finance Bill 2020 and proposed rectifications.

The OICCI said that the reduction in rate of income tax u/s 148 to 2 percent on import of raw materials/items mentioned in Part II of the Twelfth Schedule is a significant relief that will improve the cash flow position of companies.

However, two concerns have been voiced on the changes proposed:

a) The Bill seeks to introduce a new Schedule as the Twelfth Schedule to the Ordinance wherein all the goods imported into Pakistan may be classified under either of the three categories viz Part I, Part II and Part III based on PCT code wise listing of goods.

However, certain core raw materials used by manufacturers are still falling under the category of 5.5 percent income tax by virtue of non-inclusion in Part II of Twelfth Schedule.

It is suggested that a general rate of 2 percent may be prescribed for all imports by manufacturing companies for own consumption.

b) The Bill now seeks to omit Clause 72B, therefore, exemption would no longer be available in respect of tax collected under Section 148 of the Ordinance to an industrial undertaking.

Though there is substantial reduction in rate of collection of tax, as a result of withdrawal of such exemption, nevertheless, the taxpayer operating on margins lower than the rate of advance tax collected on imports or having adjustable losses/tax credits or enjoying tax exemption may still face liquidity hitches.

In order to avoid cash flow issues and tax refundable situation, it is suggested that instead of omitting clause 72 B, industrial undertakings importing raw materials for in house consumption should be provided an option.

June 23, 2020
SRB suspends sales tax registration of Turnotech for defaulting tax payment

KARACHI: Sindh Revenue Board (SRB) has suspended sales tax registration of M/s. Turnotech (Pvt) Limited defaulting tax payment and non-compliance of filing monthly returns.

In a notice the SRB said that M/s. Turnotech (Pvt) Limited had failed to comply with the following obligations:

— To discharge the Sindh sales tax liability against the services provided or rendered during the tax periods from March 2015 to July 2015, September 2015 to December 2015 and April 2016 to July 2018.

— e-file their Sindh sales tax return for the tax periods from March 2015 to July 2015, September 2015 to December 2015 and April 2016 to July 2017.

The SRB said that the suspension of the company would be revoked on taking following measures:

— to discharge the due Sindh Sales Tax liability along with default surcharge for the tax periods from March 2015 to July 2015, September 2015 to December 2015 and April 2016 to July 2017.

— to e-file the true and correct monthly Sindh sales tax returns for the tax periods from March 2015 to July 2015, September 2015 to December 2015 and April 2016 to July 2017, accordingly.

The SRB said that the compliance date for remedial actions had been fixed on June 23, 2020. In case of non-satisfactory response or failure to take remedial measures the case would be proceeded for cancellation from the provincial tax authority.

June 22, 2020
Inland Revenue offices to observe extended working hours on June 29 – 30

ISLAMABAD: The offices of Inland Revenue have been directed to observe extended working hours on last two days of current fiscal year in order to facilitate taxpayers in payment of duty and taxes.

In an office order issued on Monday, the Federal Board of Revenue (FBR) said that all Large Taxpayers Units (LTUs), Corporate Regional Tax Offices (CRTOs) and RTOs would remain open and observe extended working hours till 9:00 PM on Monday June 29, 2020 and till 11:00PM on Tuesday June 30, 2020 to facilitate taxpayers in payment of duty and taxes.

The FBR directed chief commissioners to establish liaison with State Bank of Pakistan (SBP) and authorized branches of National Bank of Pakistan (NBP) to ensure transfer of tax collection by these branches on June 30, 2020 as per SBP’s letter dated June 18, 2020.

June 22, 2020
FBR exempts duty, taxes on import of Remdesivir

ISLAMABAD: Federal Board of Revenue (FBR) on Monday exempt duty and taxes on import of antiviral drugs for prevention of coronavirus.

The FBR issued SRO 557(I)/2020 to exempt income tax on import of finished drug Remdesivir 100mg injection and injectable solution 100 mg vital.

A new section 12D has been inserted to Section 148 of Income Tax Ordinance, 2001 to provide relief on import of the drug.

Similarly, another SRO 558(I)/2020 has been issued by the FBR to exempt the import of finished drug Remdesivir 100 mg injection and injectable solution 100mg vial (PCT3004.9099) from whole of the customs duty and additional customs duty.

June 22, 2020
Stock market gains 299 points after intra-day losses

KARACHI: The stock market increased by 299 points on Monday after making recovery of intra-day losses.

The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 33,738 points as against 33,438 points showing an increase of 299 points.

Analysts at Arif Habib Limited said that the market went down in the early part of the session, declining by 368 points but rebounded later to erase all losses.

The intra-day movement amounted to 723 points. Fertilizer sector contributed to the positivity, mainly on the back of EFERT and FFC, which was further aided by a rebound in E&P stocks (OGDC and PPL).

Among Banks, BAFL and MCB, which were positive on the last trading day due to FTSE rebalancing, sustained price losses but otherwise the banking sector stocks some brisk buying activity, especially FABL, which hit upper circuit.

Technology sector realized trading volume of 19.6 million shares, followed by Cement (18.1 million) and Banks (12.8 million). Among scrips, UNITY topped the volumes with 11.5 million shares, followed by MLCF (8.2 million) and TRG (7.3 million).

Sectors contributing to the performance include Fertilizer (+120 points), E&P (+64 points), Power (+33 points), Banks (+25 points) and Autos (+23 points).

Volumes increased from 105.9 million shares to 161 million shares (+51 percent DoD). Average traded value also increased by 83 percent to reach US$ 36.8 million as against US$ 20 million.

Stocks that contributed significantly to the volumes include UNITY, MLCF, TRG, HASCOL and HUMNL, which formed 25 percent of total volumes.

Stocks that contributed positively to the index include FFC (+49 points), ENGRO (+48 points), OGDC (+30 points), HUBC (+26 points) and EFERT (+21 points). Stocks that contributed negatively include AGP (-14 points), MCB (-12 points), ABOT (-5 points), SHFA (-5 points), and NESTLE (-5 points).

June 22, 2020