Blog

Engro Corp announces Rs7.5 billion investment in telecom infrastructure

KARACHI: Pakistan’s premier conglomerate, Engro Corporation, has announced investment in telecom infrastructure.

The investment has been approved by board of directors of the corp. in its meeting held on April 25, 2019. The BoD also approved financial results for the quarter ended March 31, 2019.

Engro Corporation, in light of its long-term strategy, has streamlined its businesses in four verticals namely Food & Agriculture, Energy & Related Infrastructure, Petrochemicals and Telecommunications Infrastructure; focused on creating value and helping Pakistan resolve these pressing issues.

In order to develop potential business opportunities in the telecommunications infrastructure vertical, the Company had earlier set up Enfrashare (Private) Limited.

Enfrashare will accelerate development of the country’s connectivity infrastructure, thereby providing an opportunity for people to be part of the new digital era.

As an initial investment, Enfrashare will engage in the acquisition & construction of shared telecom towers, provision of various telecommunication infrastructure & related services, including state of the art network monitoring solutions.

“To enable this, the Directors have approved an investment of Rs7.5 billion in this vertical,” a statement said on Friday.

Ghias Khan, President & CEO Engro Corporation said: “Investments in energy, telecommunications infrastructure, petrochemicals and food and agriculture can accelerate change, help towards increasing exports, substitution of imports, industrialization in the country, job creation and hence build a stronger Pakistan.”

“Engro Corporation will continue to explore investment opportunities across these four identified verticals with a focus to improve the lives of our stakeholders and communities in which we live and work with a culture founded on truth, trust and a relentless pursuit of excellence.”

Furthermore, to continue building on Engro’s experience in the Petrochemical sector and keeping with its strategic ambitions that the Company will seek investment opportunities in this vertical, the Board of Directors approved the commencement of a feasibility study of a polypropylene facility based on a propane dehydrogenation plant.

This will also enable the company to initiate discussions with potential partners and/or stakeholders for developing this project.

Investment in the Petrochemical sector will create opportunities for both substituting the imports & enhancing the export potential, thus help in building foreign currency reserves of the country.

Simultaneously with a view to expand its footprint outside Pakistan and to explore potential trading opportunities, the Board has also approved the acquisition of 100 percent shares of Engro Eximp FZE, a wholly owned subsidiary of Engro Fertilizers Limited, for Rs1.76 Billion (subject to adjustments at the date of closing of the transaction and corporate approvals).

The company’s consolidated revenue grew by 21 percent in comparison to the prior period, driven by higher Urea sales in the Fertilizer business.

The Company posted a consolidated profit-after-tax (PAT) of Rs6,565 million compared to PKR 6,837 million for the prior period.

April 26, 2019
FBR set asides penalty on four customs officials

ISLAMABAD: Federal Board of Revenue (FBR) on Friday set-aside penalty imposed on four officials of Customs collectorate Quetta with future warning.

The FBR Member Admin as appellate authority accepted the appeal of four customs officials of BS-16 including Muhammad Arif Dostani, Muhammad Arif, Ghulam Hussain Khoso, Saleem Akhtar, and set aside the minor penalty imposed on the officials.

The chief management on June 19, 2017 imposed penalty on those four officials of ‘withholding of four increments without cumulative effect.’

April 26, 2019
Prime Minister, World Bank CEO discuss economic, fiscal situation

ISLAMABAD: Prime Minister Imran Khan on Friday met Ms. Kristalina Georgieva, Chief Executive Officer (CEO) of the World Bank discussed economic and fiscal situation on the sidelines of the second Belt and Road Forum (BRF), says a press release received here from Beijing, China.

The prime minister was accompanied by the foreign minister and adviser on finance and adviser on commerce.

The prime minister informed CEO, World Bank of the recent steps taken by the government for improving the economic and fiscal situation in the country.

He appreciated the role played by the World Bank in regional connectivity, poverty alleviation, financial management, provisional projects, DASU and other infrastructure projects and ease of doing business.

The prime minister also informed the CEO about the socio-economic uplift measures taken up by the government and creation of “Ehsaas” social welfare programme.

The CEO of the World Bank pledged to further strengthen cooperation with Pakistan in the areas of disbursements programme lending and guarantees provision for raising external funds.

April 26, 2019
Equity market gains 335 points amid optimism on IMF loan program

KARACHI: The equity market gained 335 points on Friday amid optimistic sentiment over IMF loan program.

The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 37,130 points as against 36,796 points showing an increase of +335 points.

Analysts at Arif Habib Limited said that the market increased consecutively with another 362 points during the day and ended the session +335 points.

Optimism can clearly be seen from market participants, which emanates from likely conclusion of IMF package in the first week of May as well as PM’s visit to China.

Cement sector performed well on the news of settlement of sales quota amongst cement manufacturers on upcoming meeting coming Monday.

A host of result announcements also helped prop-up the index. BOP topped the volumes table with 20M shares, followed by PAEL (9 million) and UNITY (7 million).

Banking sector performed well with 27 million shares, which was followed by Cement Sector (23 million shares).

Sectors contributing to the performance include Cement (+104 points), Tobacco (+38 points), Power (+34 points), Autos (+28 points) and Fertilizer (+19 points).

Volumes increased from 106.8 million shares to 146.8 million shares (+35 percent DoD). Average traded value also increased by 23 percent to reach US$ 36.8 million as against US$ 29.8 million.

Stocks that contributed significantly to the volumes include BOP, PAEL, UNITY, TRG and FCCL, which formed 35 percent of total volumes.

Stocks that contributed positively include LUCK (+51 points), PAKT (+32 points), DAWH (+23 points), DGKC (+16 points), and FCCL (+16 points). Stocks that contributed negatively include MCB (-16 points), BAHL (-15 points), UBL (-9 points), IGIHL (-6 points) and FFC (-5 points).

April 26, 2019
Rupee ends unchanged for 10th consecutive trading day

KARACHI: The Pak Rupee was remained unchanged against dollar on Friday for the 10th consecutive trading day.

The rupee ended Rs141.40 to the dollar, same previous day’s level, in interbank foreign exchange market.

The interbank foreign exchange market was initiated in the range of Rs141.39 and Rs141.40.

The market recorded day high of Rs141.40 and low of Rs141.3975 and closed at Rs141.40.

The exchange rate in open market was also remained unchanged.

The buying and selling of dollar was recorded at Rs141.70 / Rs142.20, the same previous day’s closing, in the cash ready market.

April 26, 2019
PSX proposes scheme for attracting investment from black economy

KARACHI: Pakistan Stock Exchange (PSX) has advised the government to introduce a scheme for attracting investment from large black economy.

In its budget proposals for fiscal year 2019/2020 the stock exchange advised the government to introduce a mechanism and regulatory structure for the launch of registered savings and investment accounts (RSIA) to help channel savings towards productive investments.

“RSIAs will help capital from the large undocumented sector into the formal economy. Further. It is also crucial firm guarantees be offered that contributions be subject to full amnesty – aside from Anti-Money Laundering and Terrorist Financing issues diligence.”

Giving rationale to its proposal, the PSX said that where they have been introduced, registered savings and investment accounts have been very successful in channeling saving to productive investments through capital markets and often constituents the main source of income in retirement.

In Pakistan, they will bring the added benefit of driving the government’s goal to document the informal sector.

RSIAs could become one of the driving forces in the transformation of Pakistan’s economy. By some estimates, 40 million middle-class Pakistanis have an average accumulated wealth of $10,000 for a total over Rs50 trillion.

“Much of that wealth is currently investment in real estate, gold and other asset classes in Pakistan and offshore. If RSIAs can capture 10 percent of that wealth, it would be equivalent to more than half the current market capitalization of PSX listed companies or more than the outstanding amount of PIBs and Sukuks.

The stock market proposed the new scheme to be introduced in the Income Tax Ordinance, 2001.

The PSX recommended that initially there should be no limit to the amount an investor can contribute to a RSIA. “In this way, the government would maximize the benefits of RSIAs described above, including tax revenue upon withdrawal. Furthermore, unlike VPSs, no tax credit should be given with regard to contributed amounts.”

It is further recommended that all income within the account such as capital gains and dividends should be tax free, like VPSs. It is this feature and the opportunity to legally invest in capital market instruments that will attract capital from the informal sector.

“Investment should be limited to listed equities, ETFs, tradable bonds and mutual funds. Principle-based prudential rules must be adopted to ensure protection of client assets and suitability of investments.”

The PSX said that withdrawals should be treated a taxable income because contributions are presumed to have been made from sources that have not been taxed.

“Unlike VPSs, investors should be allowed to withdraw capital from the account any time they want. That feature is key in attracting capital from wealthy individuals who may otherwise not want to lock up their capital.”

April 26, 2019
PSX’s net profit falls by 10.6pc on elimination of tax on bonus shares

KARACHI: The earning of Pakistan Stock Exchange (PSX) during first nine months of current fiscal year fell by 10.6 percent due to elimination of tax on bonus shares, which results no dividend received by the capital market.

The stock market on Friday released its financial report and said that its earnings were Rs59 million during July-March 2019 as compared with Rs66 million in the corresponding period of the last fiscal year.

The PSX said that foreign investors had been balancing their portfolios since the net buy position for the third quarter 2019 stood at over $31.3 million. “This indicates their optimism about the long term prospects of Pakistan’s equity market,” it said.

“However, during the nine months period ended March 31, 2019, the foreign investors off-loaded securities worth $373 million which was absorbed by the local investors,” it added.

During the period, the Finance Supplementary (Second Amendment) Act, 2019 was enacted in March 2019 and some notable features favorable to the capital market include abolishment of the advance tax at 0.02 percent on purchase and sale value of shares traded in lieu of tax on commission applicable to members of the stock exchange, loss on disposal of securities would be allowed to carry forward to the next year and subsequent two tax years, to be offset against capital gain earned in those years and effective July 01, 2019, for companies availing group relief, tax on inter-corporate dividend has been reduced to the extent of percentage of shareholding the recipient of dividend has in the distributing company.

PSX recorded a pre-tax profit of Rs64 million for the nine-month period ended March 31, 2019 against Rs122 million for the corresponding period of the last fiscal year, posting 48 percent decline.

During the year, PSX implemented revised fee structure for the annual listing fee. This structure resulted increase in revenue by Rs113 million during first nine months of current fiscal year.

April 26, 2019
Salary tax card – updated for Tax Year 2019

KARACHI: Federal Board of Revenue (FBR) has updated tax rate for salary persons as per Finance Supplementary (Second Amendment) Act, 2019.

The tax card is updated up to March 09, 2019.

The FBR said that persons responsible for paying salary are required to collect tax from employees under Section 149 of Income Tax Ordinance, 2001 at the time salary is actually paid.

Every person responsible for paying Salary to an employee shall deduct tax from the amount paid:

1. Where the taxable income does not exceed Rs, 400,000: Zero percent

2. Where the taxable income exceeds Rs, 400,000 but does not exceed Rs, 800,000: Rs1,000

3. Where the taxable income exceeds Rs, 800,000 but does not exceed Rs, 1,200,000: Rs2,000

4. Where the taxable income exceeds Rs, 1,200,000 but does not exceed Rs, 2,500,000: 5 percent of the amount exceeding Rs, 1,200,000.

5. Where the taxable income exceeds Rs, 2,500,000 but does not exceed Rs, 4,000,000: Rs, 65,000/- + 15 percent of the amount exceeding Rs. 2,500,000.

6. Where the taxable income exceeds Rs, 4,000,000 but does not exceed Rs, 8,000,000: Rs. 290,000/- + 20 percent of the amount exceeding Rs. 4,000,000.

7. Where the taxable income exceeds Rs, 8,000,000: Rs. 1,090,000/- + 25 percent of the amount exceeding Rs. 4,800,000.

Provided that where the taxable income exceeds Rs. 800,000/- the minimum tax payable shall be Rs.2,000/-

April 26, 2019
Sales Tax Act 1990: imposition of default surcharge in fraud, non-payment

KARACHI: A person willfully does not make sales tax payment or commits fraud shall liable to pay default surcharge along with actual amount.

According to updated Sales Tax Act, 1990 issued by the Federal Board of Revenue (FBR) the default surcharge has been explained through Section 34.

Section 34: Default Surcharge

Sub-Section (1): Notwithstanding the provisions of section 11, if a registered person does not pay the tax due or any part thereof, whether willfully or otherwise, in time or in the manner specified under this Act, rules or notifications issued thereunder or claims a tax credit, refund or makes an adjustment which is not admissible to him, or incorrectly applies the rate of zero per cent to supplies made by him, he shall, in addition to the tax due, pay default surcharge at the rate mentioned below:—

(a) the person liable to pay any amount of tax or charge or the amount of refund erroneously made, shall pay default surcharge at the rate of twelve percent per annum, of the amount of tax due or the amount of refund erroneously made; and

(b) deleted

(c) in case, the default is on account of tax fraud, the person who has committed tax fraud shall pay default surcharge at the rate of two per cent per month, of the amount of tax evaded or the amount of refund fraudulently claimed, till such time the entire liability including the amount of default surcharge is paid.

Sub-Section (2): For the purpose of calculation of default surcharge, –

(a) in the case of inadmissible input tax credit or refund, the period of default shall be reckoned from the date of adjustment of such credit or, as the case may be, refund is received; and

(b) in the case of non-payment of tax or part thereof, the period of default shall be reckoned from the 16th day of a month (following the due date of the tax period to which the default relates) to the day preceding the date on which the tax due is actually paid.

Explanation: For the purpose of this section tax due does not include the amount of penalty.

April 26, 2019
FBR issues rules for ADR in sales tax, federal excise cases

ISLAMABAD: Federal Board of Revenue (FBR) on Thursday notified rules to make Alternate Dispute Resolution Committee (ADRC) functional for cases in sales tax and federal excise.

The FBR issued SROs 488 and 489 (I)/2019 to notify the rules. The ADRC is required to decide a case within 120 days and the decision will have binding effect on both taxpayers and tax officials.

Under the rules any person interested for resolution of any dispute shall make a written application for alternative dispute resolution to the FBR.

The FBR, after examination of contents of the application and facts stated therein and on satisfaction that the application may be referred to a Committee for the resolution of the hardship or dispute, shall appoint and notify a Committee, within a period of sixty days from receipt of the application.

A retired judge not below the rank of District and Sessions Judge, appointed in a manner as aforesaid, shall be Chairperson of the Committee.

After notification of the Committee, the applicant or the Commissioner or both, as the case may be, shall withdraw appeal pending before any court of law or an appellate authority relating to the hardship or dispute stated in the application.

The Committee shall commence proceedings after receipt of order of withdrawal of appeal from the FBR.

The chairperson of the Committee shall be responsible for deciding the procedure to be followed by the Committee which may, inter-alia, include the following, namely:-

(a) to decide about the place of sitting of the Committee, in consultation with the Chief Commissioner having jurisdiction over the applicant;

(b) to specify date and time for conducting proceedings by the Committee;

(c) to supervise the proceedings of the Committee;

(d) to issue notices by courier or registered post or electronic mail to the applicant;

(e) to requisition and produce relevant records or witnesses from the Commissioner or other concerned quarters;

(f) to ensure attendance of the applicant for hearing either in person or through an advocate, representative or a tax consultant;

(g) to consolidate decision of the Committee and communicate it to the Board, the Commissioner and the applicant; and

(h) for any other matter covered under these rules.

The Committee may conduct inquiry, seek expert opinion, direct any officer of Inland Revenue or any other person to conduct an audit and make recommendations to the Committee in respect of dispute or hardship.

The Committee may determine the issue and may thereafter seek further information or data or expert opinion or make or cause to be made such inquiries or audit as it may deem fit, to decide the matter.

The Committee shall decide the dispute within one hundred and twenty days from the date of receipt of order of withdrawal from the FBR.

Decision of majority members of the Committee shall be construed decision of the Committee which shall be communicated by the Committee to the FBR, the Commissioner having jurisdiction and the applicant.

The decision of the Committee shall be binding on the Commissioner and the aggrieved person.

On receipt of the Committee’s decision, the applicant shall make payment of sales tax and other taxes as specified by the Committee in its decision and the Commissioner shall modify order as per decision of the Committee.

April 26, 2019