KARACHI: The federal government has officially appointed Dr. Murtaza Syed as Deputy Governor of the State Bank of Pakistan (SBP), in accordance with Section 10(4) of the SBP Act of 1956 (as amended), the central bank announced on Tuesday. Dr. Syed assumed his responsibilities at the SBP on January 27, 2020, bringing with him a wealth of experience in macroeconomic policy and research.
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National Savings screening meant to stop ill-gotten money: Finance Division
ISLAMABAD: The Finance Division on Monday said that the screening of all saving schemes is meant to stop any ill-gotten money to become part of financial system and to safeguard the valued investors from the menace of Money Laundering and Terrorist Financing.
The Ministry of Finance, while clarifying news reports, said that Central Directorate of National Savings (CDNS) is committed to mitigating the deficiency to improve customer service delivery and to comply with the FATF recommendation to safeguard the investors’ interests.
Banks under the supervision of SBP have already put in place all the required systems and KYCs (Know Your Customers) processes to comply with the FATF recommendations.
In order to implement this requirement, Finance Division through promulgation of National Savings Schemes (AML-CFT) Rules, 2019 has decided to engage an AML-CFT compliant bank, through competitive bidding, to put in place the requirements as well as the necessary training of employees of National Savings.
Accordingly, Expression of Interest, in consultation with SBP, has been sought from the interested bank to conduct KYC and other requirement of new as well as existing clients of CDNS.
This will include the biometric verisys and screening of potential clients in UN Proscribed person List.
All these screenings are meant to stop any ill-gotten money to become part of financial system and to safeguard the valued investor from the menace of Money Laundering and Terrorist Financing.
Finance Division therefore reiterates that the steps of the Government are aimed at making the CDNS compliant with the FATF requirement and are not intended to jeopardize the interests of the account holders / customers.
Moreover, third-party arrangement will make the organization i.e CDNS more transparent and viable for the customers and will not in any case affect its financial business.
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FBR warns legal action against non filers
KARACHI: Federal Board of Revenue (FBR) on Monday warned persons having taxable income to file their annual returns for tax year 2019 otherwise tax authorities will initiate legal proceedings.
The FBR issued reminder for persons having taxable income but so far unable to file their annual returns for tax year 2019.
The FBR said that the last date for filing income tax returns is January 31, 2020. It said that filing of income tax return is mandatory for all persons with annual income of Rs400,000 or more.
The tax body warned that in case individual/company fails to file their returns by due date, the FBR will assess the applicable tax without serving any notice.
It highlighted the disadvantages of not filing or late filing the returns as those persons would not be part of Active Taxpayers List (ATL).
The FBR said that non appearance on ATL the withholding tax will be charged at double rates.
Further, the FBR will initiate legal action that may result into imprisonment of one to three years. Besides, fine will be charged on late submission of income tax returns.
The FBR explain the procedure to file income tax returns. It said that an individual should login to IRIS with username and password; click on declaration tab after login; select tax year; select the form for relevant category; click on verification after entering details such as salary slip, bank statement, utility bill, tax statement, expenditure and assets etc.
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Revised gas price proposal to hit fertilizer industry
ISLAMABAD: In response to the recommendation by OGRA dated December 11, 2019 the Ministry of Petroleum has worked out certain revisions in the sector wise gas prices where it has recommended to increase fertilizers feed gas price by 5 percent while fuel gas price to be linked with RLNG prices currently at Rs1,672/MMBTU.
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Stock brokers express serious reservations on proposed new regime
KARACHI: PSX Stockbrokers Association has issued rebuttal on propaganda of Securities and Exchange Commission (SECP) through media to pass the proposed new brokers regime (NBR).
In a press release issued on Monday, it said that firstly, the so called “Small Brokers” term do not exist.PSX Stockbrokers Association (PSA) being representative of more than 66% of the Brokers Fraternity has serious reservations on the Proposed NBR. Regulators approach to defuse the tension by using Small, Medium and Large Size Brokerage Houses is an effort to divide and rule.
None of the objectives, used to float this NBR, can be achieved by merely increasing the Net-Worth of the Stock Brokers. Clearing and Settlement Risk, as envisaged as Primary Objective, do not exist particularly when:
1. Pre and Post trade margins are taken
2. PSX settles trade on T+2 basis
3. Minimum Rs.16 million per broker is being collected as margin under Base Minimum Capital (BMC) irrespective of any trade
4. Minimum Rs.5 million under Net Capital Balance
5. Minimum Rs.7.5 million under Liquid Capital Balance(LCB)
Apart from the above, a total fund of more than Rs.7 billion is accumulated under Settlement Guarantee Fund and Investor Protection Funds collected by National Clearing Company of Pakistan Ltd (NCCPL) and Pakistan Stock Exchange (PSX) respectively.
Stock Market declined by more than 50% from May 2017, from 53,500 Index to 28,000 Level without any clearing and settlement default. This clearly reflects that Exposure Margins, acquired by Front Line Regulators, have also minimized, if not eroded the existence of Clearing and Settlement Risk.
As far as the Custody Risk is concerned, this Proposed NBR in fact increases the said risk, rather than reducing it. A simple calculation based on the parameters provided under the scheme would reveal that Stock Brokers would now be allowed custody by more than 200% of what is allowed currently.
The foregoing clearly reflects that none of the objective of this NBR will be achieved rather than Custody Risk will be concentrated more in few hands.
Proposed increase in Net-Worth of Rs.65 million in the NBR cannot justify allowance of 200% increases in Custody.
Therefore, it cannot be claimed that it “primarily aims to strengthen the Capital Market and restore Investor’s Confidence”
Commission, while trying to aggravate using AML/CFT/FATF requirements, is unaware of the progress made by the Stock Brokerage Industry and we quote below extract from Pakistan National Risk Assessment (PNRA) Report, published in September 2019, by Ministry of Economic Affairs, wherein, clause 150 states that:Considering that all the transactions coming to the securities markets is through banking channel and the primary focus of investors in these markets is investment in securities of the companies, the securities markets are exposed to a lower TF threat abuse. Further, LEAs and EMU have so far not found any incident of TF having a link with the securities or commodities markets.
Anti Money Laundering Act, 2010, was promulgated on March 27, 2010, and Stock Brokers being Sole Properties were not made part of it. Concept of Corporate Brokerage Houses was implemented after the Demutualization in 2012.
Furthermore, the claims by SECP’s insider that 27 brokers have defaulted during last 10 years resulting in defaulting of Rs5.8 billion, is nothing but aggravating the situation as prior to demutualization Stock Broker’s Membership Card was valued at Rs150 million. Moreover, it would have been much better had the names and amount of defaulted brokerage house were also disclosed so as to give clearer picture. The average amount of Rs200 million defaults as being painted in the media is misleading.
The hidden objective of this NBR can be visualized by Section 2.2.3 of the Concept Note on NBR issued in November 2019, which stipulates that, in order to save the compliant brokerage houses that have incurred substantial compliant cost, this NBR is being introduced and all the brokerage houses are therefore forced to adopt all the compliance requirements irrespective of the nature, size and complexity of business.
This is to ensure that these third generation brokerage houses should be compelled to incur the same amount of expenses as incurred by the brokerage houses with research facilities. Regulators have overlooked the concept of discount brokerage houses, exist worldwide.
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Bahria Town investors fear their life-time savings at stake
KARACHI: Karachi Chamber of Commerce and Industry (KCCI) on Monday advised the management of Bahria Town to act sensibly as investors are fearing their life-time savings are at stake.
Acting President Karachi Chamber of Commerce & Industry (KCCI) Arshad Islam and Chairman of Karachi Chamber’s Housing, Construction & Real Estate Subcommittee Asif Sumsum at a meeting while expressing deep concerns over the hardships being faced by the allottees and members of Bahria Town, stated that the management of Bahria Town should have to act sensibly and they must prudently tackle the situation otherwise the project was likely to turn into a yet another serious scam which was neither in the interest of Bahria Town nor in the interest of Real Estate Agents, Investors and the General Public whose are fearing that all their lifetime savings were at stake.
They underscored that any issue pertaining to additional charges or irregularities in the Bahria Town project have to be amicably resolved as it was not just a matter of grave concerns for the real estate agents, investors and overseas Pakistanis but also for thousands of those masses who have invested their hard earned monies and savings in different projects of Bahria Town so that they could ultimately have their own house in a beautiful, safe and secure locality which is obviously the biggest dream of almost all the people.
Nobody can afford to see Bahria Town sinking, as it would give a serious blow not just to Bahria Town but also to all the stakeholders including the perturbed allottees and investors therefore, any irregularities in this essential project must be cautiously rectified and relief has to be provided as per aspirations of the perturbed masses, they added.
Acting President KCCI and Chairman Housing, Construction & Real Estate Subcommittee stressed that the management of Bahria Town must devise those policies and strategies that ensure uninterrupted activities at Bahria Town. Not only Bahria Town but all other Developers must strictly refrain from taking those steps that terribly shake the confidence of the public and result in drowning their investments.
The present government, local relevant authorities and the management of Bahria Town will have to seriously handle the situation, they said, adding that the Karachi Chamber, being the premier chamber of the country, is keeping a strong vigil on numerous developments in this particular issue and would certainly raise strong voice and knock every single door for assistance, if any injustice is done to the public.
“KCCI, under its policy of ‘Public Service’ introduced by Chairman BMG Siraj Kassam Teli intervenes in every single matter that directly or indirectly affects the business & industrial community or the citizens of this city”, Acting President KCCI Arshad Islam said, “We are neither against the management of Bahria Town nor favoring anyone but would be happy to see that the issue is amicably resolved which is in the larger interest of this city.”
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Stock market falls 94 points in narrow range trading
KARACHI: The stock market ended down by 94 points on Monday as it witnessed a narrow range trading. The benchmark KSE-100 index of Pakistan Stock Exchange (PSX) closed at 42,539 points as against 42,633 points showing a decline of 94 points.
Analysts at Arif Habib Limited said that the market traded in a narrow range of +105 points and -161 points, closing the session 94 points down from LDCP.
International crude price were significantly down at the opening that caused selling pressure in E&P stocks.
Likewise, rest of the oil & gas chain bore pressure among Refineries and OMCs.
Cement sector, on the other hand, performed well with MLCF and KOHC hitting upper circuits, whereas other Cement stocks also trudged well.
Cement sector led the volumes table with 66 million shares, followed by Transport (35.1 million) and Food (18.9 million).
Among scrips, MLCF topped the volumes with 25.9 million shares, followed by PIBTL (25.2 million) and FCCL (12.1 million).
Sectors contributing to the performance include EP (-93 points), Power (-37 points), Textile (-15 points), Banks (-14 points, Fertilizer (+40 points) and Cement (+19 points).
Volumes registered an increase from 173.4 million shares to 198.5 million shares (+14 percent DoD).
Average traded value declined by 3 percent to reach US$ 42.5 million as against US$ 43.5 million.
Stocks that contributed significantly to the volumes include MLCF, PIBTL, FCCL, PIAA and DGKC, which formed 42 percent of total volumes.
Stocks that contributed positively include ENGRO (+29 points), HBL (+15 points), FFC (+15 points), PIBTL (+9 points) and MLCF (+8 points).
Stocks that contributed negatively include OGDC (-41 points), HUBC (-31 points), POL (-24 points), PPL (-22 points), and MEBL (-15 points).
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Rupee ends firmer amid dollar demand
KARACHI: The Pak Rupee ended firmer against dollar on Monday despite demand of the foreign currency for import and corporate payments.
The rupee ended Rs154.57 to the dollar, the same closing level of last Friday, in interbank foreign exchange market.
Currency dealers said that the market witnessed higher demand for the greenback for import and corporate payments on the first day trading after two weekly holidays.
They, however, said that the inflows of export receipts and workers’ remittances helped the rupee to maintain level.
The foreign currency market was initiated in the range of Rs154.58/Rs154.63. The market recorded day high of Rs154.58 and low of Rs154.54 and closed at Rs154.57.
The exchange rate in open market also witnessed no change in rupee value. The buying and selling of dollar was recorded at Rs154.60/Rs154.90, the same closing level of last Friday, in cash ready market.
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FBR directs education institutions to provide details of persons paying annual fee above Rs200,000
ISLAMABAD: Federal Board of Revenue (FBR) has directed educational institutions to provide details of persons paying annual fee above Rs200,000 in next three days.
Sources in FBR said that educational institutions including schools, colleges, universities, tuition centers, technical institutions etc. had been asked to provide details of parents or individuals paying annual fee above Rs200,000 by January 31, 2020.
The educational institutions have been directed to provide complete details of persons paying fees, which should include, name, address, CNIC amount of fee and tax deducted/withheld for the tax year 2020.
The sources said that the educational institutions would provide the details along with their biannual withholding statement due on January 31, 2020.
They said that under Section 236I of Income Tax Ordinance, 2001 educational institutions are required to collect withholding tax at five percent on gross amount of fee from person paying fee.
The section read as:
“236I. Collection of advance tax by educational institutions.— (1) There shall be collected advance tax at the rate specified in Division XVI of Part-IV of the First Schedule on the amount of fee paid to an educational institution.
(2) The person preparing fee voucher or challan shall charge advance tax under sub-section (1) in the manner the fee is charged.
(3) Advance tax under this section shall not be collected from a person on an amount which is paid by way of scholarship or where annual fee does not exceed two hundred thousand rupees.
(4) The term ‘fee’ includes, tuition fee and all charges received by the educational institution, by whatever name called, excluding the amount which is refundable.
(5) Tax collected under this section shall be adjustable against the tax liability of either of the parents or guardian making payment of the fee.
(6) Advance tax under this section shall not be collected from a person who is a non-resident and,—
(i) furnishes copy of passport as an evidence to the educational institution that during previous tax year, his stay in Pakistan was less than one hundred eighty-three days;
(ii) furnishes a certificate that he has no Pakistan-source income; and
(iii) the fee is remitted directly from abroad through normal banking channels to the bank account of the educational institution.”
The rate of collection of tax under section 236I shall be 5 percent of the amount of fee.
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FBR monitors immovable property transactions to enforce fair market values
KARACHI: Federal Board of Revenue (FBR) is monitoring transactions of immovable properties to check sales and purchases on fair market value, sources told PkRevenue.com.
The sources said that the FBR had reduced the withholding tax rate to one percent from July 01, 2019 to be collected from purchaser of immovable properties. However, this rate should be two percent in case the buyer is not listed on the Active Taxpayers List (ATL).
The sources said that the tax offices had been asked to monitor the transaction of immovable properties under the new rates with true declaration of amount.
The sources said that the FBR was fully aware about the size of undeclared money invested in the real estate business. Therefore, the monitoring was started. However, comprehensive data of buyers and sellers will be provided by withholding agents to the FBR by January 31, 2020.
The sources said that the withholding agents for immovable transactions are those persons registering, recording or attesting or transfer including local authorities, housing authorities, Housing Society, Co-operative Society and registrar or properties.
They said that tax offices would start massive crackdown after receiving the data from withholding agents.
They said that people were not declaring true values of immovable properties at the time of registration or transfer, which was causing massive loss to national exchequer.
They further said that by concealing the true amount, buyers and sellers were also promoting black economy.
The sources said that withholding agents would provide details of buyers and sellers, including names, addresses, CNICs, declared value and amount of tax withheld.
The FBR sources the tax authorities would examine the mode of payment and compare the declared value with the prices prevailed in the open market.
They said that after conducting examination the tax authorities would ask buyers and sellers of immovable properties to file income tax returns, in case those persons were not in the tax net.