The Lahore Chamber of Commerce and Industry (LCCI) and the Association of Chartered Certified Accountants (ACCA) have teamed up to advance financial literacy among small and medium-sized enterprises (SMEs) in Pakistan.
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ACCA conference highlights challenges faced by public sector
A conference hosted by Association of Chartered Certified Accountants (ACCA) highlighted the challenges faced by public sectors and gave solutions
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ACCA backs green budgeting for public sector
KARACHI: ACCA (the Association of Chartered Certified Accountants) backs green budgeting for the public sector everywhere to implement climate commitments and achieve their environmental goals, according to a statement received here on Thursday.
In Green budgeting: a toolkit for public sector finance professionals published today, ACCA sets out the reasons for considering green budgeting and the methods that can be adopted. It highlights the crucial role that finance professionals must play in making action on climate change a reality.
John Lelliott, OBE, FCCA, chair of ACCA’s Global Forum for Sustainability and former finance director at the UK Crown Estate, wrote a foreword to the toolkit. He says: ‘Action to address the climate crisis requires change across the entire public sector. Climate considerations must be central to public sector organisations’ decision-making processes. The budget cycle is at the heart of the way organisations implement their objectives.’
Green budgeting supports progress towards national and international climate commitments and goals; promotes environmentally responsive policy making; fosters transparency and helps investors as they look to fund sustainable activities through financial instruments such as green bonds.
The toolkit identifies three important conditions to support successful implementation: political will; building on existing processes; and adopting green budgeting across the whole public sector – half of all public spending on climate and the environment is at sub-national level.
The report also sets out five key steps to adopting green budgeting: develop a baseline; prioritise spending with the most impact; categorise and monitor spending; ensure external review and then learn and improve.
The toolkit highlights how finance professionals are at the heart of green budgeting and can enable public sector organisations to turn goals and ambitions into costed plans.
Assad Hameed Khan, head of ACCA Pakistan, says: ‘Climate change, as experienced through the recent floods, is already having a profound impact on Pakistan. Government is at the forefront of the response to climate change including the need to integrate and mainstream climate action in every public sector organisation.
Accountancy and finance professionals in the public sector will be essential to this task. It’s a great opportunity for public sector accountants to step forward and make a real difference’.
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ACCA hosts conference for Pakistan sustainable growth
KARACHI: The Association of Chartered Certified Accountants (ACCA) hosted a large-scale corporate conference in Peshawar, themed ‘Rethinking a better world – Sustainable Growth for Pakistan,’ featuring representation from the country’s top businesses, thought leadership and policymakers.
The conference provided a platform for the region’s key stakeholders and brightest minds to engage in interdisciplinary, forward-thinking conversations to propose an agenda to revitalise the private sector and kick start an era of sustainable, inclusive economic growth.
The event was attended by many prominent names in the corporate sector, as well as leading policymakers and provincial cabinet members.
At the conference, ACCA shared insights, practical guidance, strategies, and solutions to enable businesses and policymakers to embrace new technologies and create a conducive environment for innovation and entrepreneurship. Featuring contributions from forward-thinking thought leaders, the conference program included a future-focused panel conversation on the KP Roadmap to Pakistan’s Economic Recovery- Challenges and Way Forward.
The conversation leaders for the segment included Henna Karamat – Director Planning, KP Education Foundation, Government of Khyber Pakhtunkhwa, Mohsin Khan – Director IM Sciences – Peshawar, Ali Gulfaraz – MD/CEO Bank of Khyber, Jehan Bahadar – Collector – KPRA, Asim Khan – Project Director NIC Peshawar.
Taimur Saleem Khan Jhagra, Minister for Finance, Government of Khyber Pakhtunkhwa, Shahid Khattak – CFO, Khyber Pakhtunkhwa Economic Zones Development and Management Company (KPEZDMC), Ali Ibrahim – Head Communications & Marketing, Fayyaz Jarral – Executive Director – FF Steel were among the keynote speakers who shared their insights and proposed tips for organizations to become future-ready.
National University for Security Sciences, SKANS, SOS Pakistan Pvt. Ltd., and TMUC Pakistan joined ACCA as Strategic Partners. The Bank of Khyber and Mobilink Microfinance Bank were the Platinum Partners, DHA Peshawar, Evyol Group, LMKR, Mukhtar A Sheikh Hospital, Professionals’ Academy of Commerce (PAC), and Simplifiers joined as Gold Partners.
City University, DigiKhata, ICMAP, IM Sciences, KP IT Board, KPRA, Pakistan Stock Exchange, P@SHA, Rehman Medical Institute, SMEDA, and KP Women Chamber of Commerce & Industry joined as Supporting Partners. Bera, CXO Global Forum, Connected Pakistan, NIC Peshawar, and Toyota Khyber Motors joined as Community Partners. Nutshell Group powered the conference as a Knowledge Partner.
ACCA is the world’s leading body for professional accountants, with more than 241,000 fully qualified members and 542,000 future members worldwide. It uses its unrivaled connections across the globe to connect people with fulfilling careers, organizations with the best finance talent, and economies with the ingredients for growth.
With strong partnerships with top employers and the social sector across the globe and an award-winning Professional Insights program offering ground-breaking future insight, ACCA is at the forefront of finance talent development and creating future-proof careers.
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Global economy to witness weak growth: ACCA survey
KARACHI: The Association of Chartered Certified Accountants (ACCA) has conducted the Q2 Global Economic Conditions Survey (GECS).
According to the statement issued on Friday, all the main global indicators fell in the Q2 GECS, pointing to a decisive deterioration in the global economic outlook.
The Q2 GECS points to a decisive deterioration in the global economic outlook due to the effects of war in Ukraine and the surge in inflation across much of the world. But while risks have risen, indications are that a global recession will be avoided.
While confidence among financial professionals has dropped sharply, the level remains above the low-point reached at the height of the COVID-19 pandemic.
READ MORE: ACCA suggests imposing income tax on landowners
The two “fear” indices reflecting level of concern that customers and suppliers may go out of business were little changed in the Q2 survey, both edging slightly higher. Both indices have fallen back from the extreme levels seen in 2020 but are still above pre-pandemic levels.
The largest fall in confidence occurred in the Middle East, a region more exposed to trade with Russia/Ukraine while North America and Western Europe recorded especially large falls due to big jumps in inflation in recent months.
Elsewhere the falls in confidence were still significant, but more modest. Only in North America has confidence fallen back to levels seen during the COVID-19 pandemic in 2020.
READ MORE: ACCA, IMA global economic conditions survey released
While the outlook has darkened, the drop-in confidence is much greater than in orders. Indeed orders a lead indicator of economic activity are above their long run average. The employment index is also well above its long run average, despite dropping in Q2. Jobs markets are tight, and employment is rising in many economies, providing some offset to the effects of high inflation on real incomes.
In a list of top concerns since the Q1 survey, financial professionals have swapped concerns over COVID for worries about inflation and rising interest rates. But for the third GECS in a row, supply shortages and supply chain issues have remained the highest ranked risk. Hopes are that this issue would fade in importance as this year progressed are fading.
Jamie Lyon, head of skills, sectors and technology at ACCA said, “Post-pandemic recovery has now given way to negligible economic growth, elevated inflation, and extreme uncertainty. The war in Ukraine has given inflation a further boost by pushing commodity prices higher. But inflation was already high and rising before the war started in February: a strong rebound in demand fuelled by a massive monetary and fiscal response to the COVID pandemic had run up against supply shortages, resulting in a surge in price pressures.”
READ MORE: Sales tax rate in Pakistan highest in region: ACCA
Loreal Jiles, vice president of research and thought leadership at IMA added, “High inflation is resulting in falls in real disposable incomes putting downward pressure on private demand, especially household consumption. Prices of both food andenergy are rising rapidly. The result is a cost-of-living crunch on low-income households in advanced economies and across virtually all low and middle-income countries, where these two categories account for a high share of spending.”
Jamie Lyon concluded, “Risks of a global recession have increased but our central case is that growth will be positive if rather weak. Employment growth may support total consumption. Nonetheless, with the exception of the COVID recession of 2020, we expect global GDP growth this year and next will be the weakest since the Global Financial Crisis of 2007-09.”
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ACCA suggests imposing income tax on landowners
KARACHI: The Association of Chartered Certified Accountants (ACCA) has suggested the government to impose income tax at 7 percent on landowners to increase the agriculture share in the GDP.
The ACCA in its proposals for budget 2021/2022 stated that agriculture (recently growing at 2.77 percent) has the potential to reach up to 55 percent of the GDP from the current levels of around 24 percent.
“There’s a need for large landowners to be taxed at minimal rates, i.e. 7 percent,” it added. The revenue generated through this should be used to subsidise seeds, fertiliser, water, electricity, fuel, etc. for the small farmers. The use of latest, sustainable farming technology and easy access to cheap or interest-free loans should be ensured.
It urged the government to reduce tax rates to a single digit and ensure broadening of the tax net by adopting Data Analytics and Artificial Intelligence leveraging rich data sources at government’s disposal such as NADRA.
The proposals also talk about the importance of moving away from indirect taxes and calls for rationalisation, standardisation and automation of tax laws & administration to minimise harassment of taxpayers.
The suggested structural reforms include harmonisation of federal and provincial tax laws, issuance of a single tax return, reduction in the discretionary powers of tax authorities, predicating appraisals of FBR functionaries on growth of business sectors under jurisdiction to instil a mindset of using tax as a means for GDP growth, incentivising tax payers to promote a tax culture, and establishing an independent appellate forum at Commissioner Appeals level.
The proposals also hope for the government to have a long-term strategy for import substitution, call for more incentives to local industry and favours heavy duties on non-essential imports and luxury items. Tax benefits to businesses pioneering UN’s SDGs have been recommended.
The negative growth in sectors such as mining and quarrying (-6.49 percent) and electric generation (-22.96 percent) is also highlighted for the government to take immediate action.
Proper legislation and rationalisation can help improve the situation for mining and can also result in attracting FDI. Focus on bringing down line losses, improving energy mix with clear plan for transition to renewables, as well as revising the existing costly agreements, can help reduce the negative trend for the electricity generation.
The document lauds government’s interventions such as Roshan Digital Account and incentives to the construction sector and mega projects such as Ravi Riverfront and calls for their continuation and further enhancements.
The global body has shown concern about the growing unemployment (11.56 percent) among the youth aged 20-24 and urges government to make youth employment one of the focus areas with considerable spending in the budget 2021-2022.
Further innovations in the Kamyab Jawan programme and introduction of new skills development and entrepreneurship support programmes with focus on emerging technologies should be government’s priority.
Significant increase in education budget with new programmes by provinces to support girls’ education, as well as adequate spending towards health and communications infrastructure, has been termed the ‘need of the hour’ by the global body. ‘Facilitation of high broadband penetration is critical for the future-fitness of our education sector and public services delivery,’ said ACCA.
Segmented approach in programmes such as Ehsas to ensure benefits reach the most marginalised segments of community across the country should be adopted for an inclusive growth.
Close collaboration with the IT/ITeS sector is needed, and the sector should be offered with tax rebates to facilitate its expansion. Similar to CPEC, it’s believed that there’s a potential for something like ‘China-Pakistan Technology Zone’ to connect our innovation value chain with economies in the region.
It’s also pointed out that the past outstanding refunds have only been cleared partially. It’s important to strengthen the trust of the taxpayer as well as provide liquidity to businesses, especially at a time when businesses are recovering from the effects of the pandemic.
It’s reiterated that government needs to ensure openness and transparency to foster trust and cultivate a healthy tax culture in the country.
ACCA has also confirmed that it will be holding a number of seminars to discuss its budget proposals engaging country’s top business leaders and policy makers.
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Higher duty rates proposed for car, luxury items import
KARACHI: The Federal Board of Revenue (FBR) has been suggested to impose higher rates of duties on import of non-essential and luxury items in order to reduce current account deficit.
Association of Chartered Certified Accountants (ACCA) in its tax proposals for budget 2019/2020 said that tangible measures should be taken to reduce the import burden.
“Heavy duties should be levied on all non-essential imports like expensive electronics, cars & luxury items.”
In addition incentives should be announced for local industry to encourage domestic products, it suggested.
In other key reforms, the ACCA said that agricultural sector needs to be re-evaluated.
Being an agricultural country its GDP share must be according to its volume. Currently its share in GDP is 24 percent while it has the potential to reach up to 55 percent.
Large landowners should be taxed at minimal rates i.e. 7 percent with that revenue used to subsidize seeds, fertilizers, water, electricity, fuel, etc. for the small farmers.
Cheap and low quality smuggling and imports from India should be controlled.
The ACCA said that for Pakistan, a country of 220 million people, human capital is a huge resource in new era, but unfortunately due to incompetent and poor policies we are unable to convert this power in to workable force, un-employment has increased to almost 6 percent and over 4 million people are unemployed.
Keeping in view the above indicators the government needs to encourage services sectors, new industries and agriculture.
Banking sector should be used to incentivize and promote a culture of entrepreneurship.
Incentives must be announced for Services sectors particularly Telecom, home based industries, young entrepreneurship programs with special focus on women.
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Sales tax rate in Pakistan highest in region: ACCA
KARACHI: Association of Chartered Certified Accountants (ACCA) has said that the existing sales tax rate of 17 percent in Pakistan is the highest in the region.
The existing rate of Sales Tax at 17 percent is one of the highest in the region with an average of around 12 percent in Asia (15 percent in India and Bangladesh, 10 percent in Indonesia and just 6 percent in Malaysia), ACCA said in its tax proposals for budget 2019/2020.
Sales Tax should be used to broaden the tax base and not as a replacement of direct taxation.
In order to avoid the net negative costs for the economy, the rate should be brought down to single digit in a phased manner with a proposed reduction to 14 percent.
The association also recommended harmonization of inter-provincial and federal-provincial taxation for avoiding double taxation.
It said that the conflicts between various provincial revenue authorities and the federation are resulting in double taxation of services owing to the classification and jurisdiction disputes.
Also, standardizing the applicable rates while also reducing them could facilitate the businesses while also increasing the tax revenues simultaneously.
Similarly, the lack of inter-provincial harmonization also results in double taxation of services owing to the classification and jurisdiction disputes.
These issues should be resolved to create a business-friendly environment and facilitate the tax-payers.
Point of origination or deliverance of services can be agreed upon by all revenue authorities as the basis of classification and the resulting jurisdiction to resolve the major inconvenience to the taxpayers.
The ACCA highlighted the issue of adjustable input tax and said with the introduction of the STRIVE system resulting online matching of invoices, the chances of sales tax fraud and/or error have been minimized.
Therefore the current restriction of limiting the input tax adjustment to 90 percent (ninety percent) of the output tax is outdated and needs to be abolished.
This will be in line with the principles of fairness, equity and justice for all and help restore the confidence of businesses.
The association also pointed out revision of sales tax return and said this should be made easy and automated as with the STRIVE system in place, chance of tax fraud are minimized to the maximum possible extent as claimed by FBR.
It further pointed out that in line with the principles of fairness, equity and justice for all, the appeals should be heard by a person not under the administrative jurisdiction/influence of FBR.
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FBR advised making declaration of fund source mandatory for foreign remittances
KARACHI: Federal Board of Revenue (FBR) has been advised to make it mandatory the declaration of source of funds for foreign remittances.
Association of Chartered Certified Accountants (ACCA) in its tax proposals for budget 2019/2020 recommended changes to Section 111(4) of Income Tax Ordinance, 2001 regarding foreign exchange remitted from outside Pakistan.
The association recommended amendment:
“to any amount of foreign exchange remitted from outside Pakistan through normal banking channels that is encashed into rupees by a scheduled bank and a certificate from such bank is produced to that effect … and a declaration along-with evidence of the source of funds.”
It said that this will continue to promote the inflow of foreign exchange remittances towards the country while stopping the misuse of the provision to whiten/launder black monies and de-incentivizing genuine tax paying businesses.
“This way, the ‘non enquiry’ clause which has been extensively abused, will be abolished sans the current monetary limit while still retaining the tax relief for foreign exchange remittance.
The ACCA further said that the minimum tax on turnover is charged irrespective of the net profit or loss.
This often gives rise to a situation where businesses end up paying double taxes on their revenues and profits as well as loss making businesses facing additional cash-flow pressures by paying this tax.
The current rate of 1.25 percent applicable generally except for a few sectors, should be brought down to 0.4 percent.
The now deleted exception in case of a gross loss needs to be reinstated in line with the principles of natural justice and equity.
This will facilitate the business eco-system contributing to a growth in GPD which can lead to increased revenue collections for the treasury.
The association further highlighted Section 138 and 140 of the Ordinance regarding recovery of tax through attachment of bank accounts and/or property or arrest.
It said that currently, the allowance for the commissioner to attach the property of the taxpayer before expiry of notice period on “satisfaction” of the commissioner regarding possible removal, cancellation or disposal of attachable property is misused in many cases to harass the businesses.
This change can bring an end to this, increase taxpayers’ trust in the tax apparatus and improve the ease of doing business in the country.
“Any such attachment of any movable/immovable property before expiry of the notice period may only be authorized by the Commissioner in the presence of objective evidence, which should be shared with the taxpayer.”
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ACCA opposes tax amnesty, recommends enforcement on available information
KARACHI: Association of Chartered Certified Accountants (ACCA) Pakistan has opposed tax amnesties and suggested the tax machinery to use available information with proper enforcement.
“Tax Amnesties without proper penal clauses had been a failure. With the strengthening of OECD, they should be done away with and focus should instead be shifted on using the organization’s platform to retrieve necessary information and ensure proper enforcement of applicable laws and regulations,” the association recommended this in its tax proposals for budget 2019/2020.
ACCA has presented detailed recommendations for bringing structural reforms in the taxation system while opposing any amnesty scheme in the presence of plethora of information maintained by the Federal Board of Revenue.
For the structural reforms following measures have been suggested by the ACCA:
• A single tax return for all taxation affairs of a taxpayer which all authorities can utilize to obtain the relevant data.
• Harmonization of taxation laws in the country.
• Resolving issues within IRIS to make it more user friendly
• Integration of Federal and Provincial Revenue Authorities’ systems and databases
Structural Reforms
• Reducing the discretionary powers vested in FBR officials and shifting towards an objective criteria based approach
• Developing the existing policy of differential tax treatments and incentives for filers while penalizing non-filers
• Introducing impact on economic sectors (GDP development) and numbers of decisions upheld at the appellate forums along with collections target as a performance evaluation criteria for FBR functionaries
• Ensuring time limits adherence as specified in the laws and rules particularly pertaining to refund matters
• Facilitating the tax payers
• Introducing confidence by establishing a swift response complaint resolution cell to deal with corruption and harassment of tax payers
• Change in discretionary powers of FBR for moveable and/or immovable property including bank accounts attachment to improve ease of doing business and trust of taxpayers in the tax apparatus. Limit the attachment powers to only cases involving concrete information re asset disposal.
• Ensuring no post remains vacant for more than two weeks to avoid delays in resolving tax-payers issues arising out of transfers, postings and additional charges, etc.
• Limiting charge on a single post in FBR to a maximum of two (2) years to discourage the corrupt practices and collaborations.
• Effective enforcement should be ensured by working on maximum automation of the taxation system.
• Effective enforcement should be ensured by working on maximum automation of the taxation system.
• Hiring and training of adequately qualified staff with ongoing capacity building should be focused on to ensure efficient and productive results from the tax apparatus.
• Appointing independent officials as Commissioner Appeals ideally from the judicial service and qualified accountants practicing taxation from various bodies including ACCA.
• ACCA is the largest Global accountancy body, which is now the largest in Pakistan too. Including ACCA members practicing taxation within the definition of accountant members for the Appellate Tribunal Inland Revenue will further strengthen the competition and meritocracy.
• Hiring and training of adequately qualified staff with ongoing capacity building should be focused on to ensure efficient and productive results from the tax apparatus.
• Limiting charge on a single post in FBR to a maximum of two (2) years to discourage the corrupt practices and collaborations.
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