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Tag: Federation of Pakistan Chambers of Commerce and Industry

  • FPCCI demands 400 basis points cut in policy rate

    FPCCI demands 400 basis points cut in policy rate

    KARACHI: The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) on Thursday demanded the central bank to cut the policy rate by 400 basis points to five percent.

    The State Bank of Pakistan (SBP) is scheduled to release monetary policy statement on Friday May 15, 2020. The central bank in past two months reduced the policy rate by 4.25 percent to present 9 percent.

    FPCCI President Mian Anjum Nisar in a statement said that the State Bank of Pakistan (SBP) should bring down the interest rate to 5 percent.

    He said that the future anticipated expected inflation will further decline due to low demand and other effects of lockdown to control over spread of coronavirus.

    On the other hand external front is also presently sustainable due to foreign financial support and rescheduling of debt that has supported reduction in current account deficit.

    The FPCCI chief further stated that with both demand driven and import based inflation in check there is no reason to gradually bring down the interest rates when the case for immediate relief is apparent.

    He said economy of Pakistan is already hit very hard as business activities remain stop while they are paying 12 percent banks markup and cannot survive on such high KIBOR rate.

    There is 4-5 percent interest rate in Pakistan immediate regional competitors China, India Bangladesh.

    The SBP should also advice banks to revise KIBOR on a monthly basis instead of quarterly to pass on the benefit of lower rates faster to companies struggling to survive.

    The impact to banks on their deposits will be insignificant as majority is demand deposits instead of time deposits.

    Therefore, SBP lower interest rate to 5 percent in one go that is immediately reduction of 400 basis points rather lower in stages.

    He said that tough situations under COVID-19 demand support while conditions rationally suggest lowing of policy rate directly to 5 percent.

    While appreciating SBP role in sustaining economic growth through supporting trade and industry, Anjum Nisar emphasized upon financial relief by reduction in the interest rate.

    He said State bank should take measures and develop strategy to protect the pace of economic and trade progress of Pakistan Other- wise we will again face economic crises, lower industrial growth and shifting of industrial units in sick industry.

  • Uniform tax rate suggested on rental income

    Uniform tax rate suggested on rental income

    KARACHI: The tax rate on rental income should be made uniform for individual, Association of Persons (AOPs) and company at 15 percent.

    Federation of Pakistan Chambers of Commerce and Industry (FPCCI) in its proposals for budget 2020/2021, recommended to bring uniformity in taxing the rental income.

    The FPCCI said that at present for every person except companies the income from property is chargeable to tax at the rate specified in Division (VIA) of Part I of the First Schedule to the Ordinance, which is considered to be their final tax liability and they are not allowed any expenditure against gross rent, except option provided under sub-section (7) of section 15A of the Ordinance, in case income exceeds Rs.4 Million. Whereas, the companies are required to pay normal tax (current at 29 percent) on such income after adjustment of admissible expenditure out of gross rent.

    The tax rate on rental income has now been gradually increased from 20 percent to 35 percent for individuals and AOPs though the Finance Act, 2019.

    Apart from that the lessor is also required to pay Sindh Sales Tax at the rate of 3 percent to Sindh Revenue Board (SRB), which makes the total tax impact very unfair and exorbitant and lead towards un-documented business.

    The present scheme of taxation on rental income resulted the rents of warehouses had increased exorbitantly and the exporters who warehoused their exportable goods are financially hurt.

    Moreover, it has also distorted the income of the senior citizens, retired persons, pensioners, widows etc., whose livelihood solely depends upon rent of their property, made from their income in good old days.

    The FPCCI made following proposals:

    i) The rental income from property, AOP or individual and company be taxed at a uniform rate of 15% of the Gross Rent as full and final discharge of tax liability.

    ii) Rental income taxable under Normal Tax Regime should be allowed to be adjusted against business loss. The restriction imposed through Finance Act, 2013 needs to be reconsidered.

    Giving the rationales to the proposals, the FPCCI said:

    i) The impact of taxes (direct and indirect) on rental income will be rationalized.

    ii) Investors will be encouraged to declare their genuine rental income.

  • FPCCI suggests measures to broaden tax base, improving tax to GDP ratio

    FPCCI suggests measures to broaden tax base, improving tax to GDP ratio

    KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has suggested measures to broaden tax base and improving tax to GDP ratio.

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  • Curtailing powers of tax officers in recovery, entering premises suggested

    Curtailing powers of tax officers in recovery, entering premises suggested

    KARACHI: Business community has suggested curtailing powers of tax officers while invoking provisions of sales tax laws.

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  • One percent sales tax proposed on every stage of supply chain

    One percent sales tax proposed on every stage of supply chain

    KARACHI: Business community has proposed imposing one percent sales tax on every stage of supply chain of five export oriented sector without input adjustment.

    Federation of Pakistan Chambers of Commerce and Industry (FPCCI) in its budget proposals for fiscal year 2020/2021 said that Finance Act, 2019 abolished zero rating regime extended to five major export sectors i.e. textile, leather, carpets, sport goods and surgical goods by rescinding SRO 1125(I)/2011.

    Sudden removal of zero rating for export oriented sectors has proved fatal for already struggling export oriented sector as the same has resulted accumulation of huge refunds, which in turn has forced genuine taxpayers to knock the doors of tax officers for issuance of their RPOs, which has further promoted harassment and opened up a new window of bribery.

    Withdrawal of zero rating has caused liquidity issues even for large exporters.

    The removal of zero rating has made it almost impossible for exporters to stand anywhere near global competitors.

    Moreover, in order to get maximum possible input tax adjustment, suppliers who are able to supply locally as well as in international markets are preferring local sales at the cost of exports to get maximum possible input tax adjustment.

    This has resulted in visible decline in quantitative exports of these sectors, damaging foreign exchange reserves and worsening current account deficit.

    The FPCCI proposed that Sales Tax at one percent on total value of supply may be charged at every stage in supply chain of these sectors without any input adjustment.

    An example of finished garment chain is given as follows:

    i. import or local purchase of fiber – 1 percent

    ii. ginning – 1 percent

    iii. spinning – 1 percent

    iv. knitting/weaving – 1 percent

    v. dying – 1 percent

    vi. cloth – 1 percent

    vii. garment stage – 1 percent

    In this way, say in case of a finished garment product, exchequer will collect 7 percent sales tax.

    All the raw materials including chemicals and dyes which were included in the erstwhile SRO 1125(I)/2011 dated 31-12-2011 be also subject to 1 percent Sales Tax without adjustment as it will incur no loss to the government exchequer.

    The above sales tax in the value chain without input tax adjustment will provide the required revenue to exchequer on one hand, while on the other, the same will relieve the taxpayers of liquidity issues being faced by them in form of huge refunds.

    This will also save administrative costs and time of the Board, enabling the force field force to focus on broadening tax base and real revenue collections.

  • Immunity from audit against CNIC condition demanded

    Immunity from audit against CNIC condition demanded

    KARACHI: The business community has demanded the Federal Board of Revenue (FBR) to give immunity from audit against CNIC condition for tax year 2020.

    In its budget proposals for fiscal year 2020/2021, the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) demanded amnesty from audit against Computerized National Identity Card (CNIC) condition for tax year 2020.

    The FPCCI said that the condition of CNIC on unregistered sales was introduced in the Finance Act 2019 but it was not implemented in its true spirit because of various reasons.

    The FPCCI highlighted that in July 2019 was initially exempted of CNIC condition through legislation.

    From August 2019 to January 2020, the condition was relaxed through agreement between shopkeepers and FBR.

    Thereafter, from late February 2020 till unforeseen future, there has been tremendous pressure on the markets due to complete lockdown of the whole country because of the ongoing COVID-19 pandemic.

    The FPCCI said that CNIC condition has been causing cashflow issues since its implementation which will further intensify during the current pandemic of COVID-19, especially for registered taxpayers.

    Therefore, in order to facilitate the registered Taxpayer, a general amnesty through legislation is requested in the next budget regarding CNIC condition for the whole tax year 2020 starting from August 2019 to June 2020.

  • FPCCI praises central bank for reducing policy rate to nine percent

    FPCCI praises central bank for reducing policy rate to nine percent

    KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has praised the central bank for reducing policy rate by two percent to nine percent from 11 percent.

    In a statement issued on Friday, Mian Anjum Nisar, President, FPCCI appreciated reduction in the policy rates by 2 percent from 11 percent to 9 percent by State Bank of Pakistan (SBP) in view of the current situation and banks should follow SBP immediately accordingly.

    The reduction in policy rate by 4.25 percent in a month is commendable step of the government in the present situation that will positively affect cost of doing business and will encourage Investors and Industrialists to make new investment in the country.

    The president FPCCI also said that the pandemic COVID-19 has affected the global economy and pushed to the depression resulting contraction in the economic activities and a threat to unemployment.

    He told that the expected long-terms affects are more severe than the previous great depression losses.

    He apprehended that the economy of Pakistan will contract by 1.5 percent due to COVID-19 in the current fiscal year and the government has to take immediate measures to protect the trade and industry that will ensure future employment, economic growth and socio-economic prosperity.

    Present available resources must be utilized to safeguard the trade and industry so that our industry could be able to compete with global world after this crisis.

    The whole economy is in lock down situation since last 26 days, and will continue for 3 months which is building liquidity crunch and our policies should address post CORONA situation so that business can run and jobs can be secured.

    He also said that affected countries have considerably reduced interest rates and Pakistan’s trade and industry is also in a dire need to further reduction in the interest rate to nearly 5 percent so it could be sustain under the prevailing conditions.

    He further stated that foreign exchange reserves are increasing due to assistance from IMF, World Bank, Asian Development Bank and other friendly countries so SBP also control and manage the market more effectively particularly the exchange rates.

    FPCCI chief emphasized that the SBP Scheme of loans to industry for salaries payment of employees should be interest free and the government should also contribute in it as it will be a liability to payback with interest for the period when industry is closed and workers are at homes.

    The scheme needs to be revisited with the consultation of the stakeholders who are facing multidimensional problems and are able to guide the policy maker under this terrible situation.

  • Why non-filers happy in paying high withholding tax rates, FPCCI asks FBR

    Why non-filers happy in paying high withholding tax rates, FPCCI asks FBR

    KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has expressed concerns over lower number of return filers and asked Federal Board of Revenue (FBR) to identify reasons that why non-filers happy in paying higher rate of withholding tax.

    According to a statement on Thursday, the FPCCI has finalize proposals for upcoming budget 2020/2021.

    The proposals have been drafted keeping in view of the objectives of (i) Revamping Taxation System (ii) Documentation of Economy (iii) Employment generation through Industrialization (iv) Promoting a responsive and equitable Taxation System (v) Infrastructure Development (vi) Trickledown effect of the fiscal space to the grass root level etc., and would be submitted to the concerned quarters within fortnight”.

    This was stated by Mian Anjum Nisar, President, FPCCI and Zakaria Usman, Convener of the FPCCI Budget Advisory Council.

    Elaborating the methodology of the budget proposals exercise, they stated that the FPCCI with a consistent commitment to developing and promoting a modern, responsive and equitable taxation system, has formulated these proposals on the basis of impartial, unbiased and transparent manner after taking a painstaking lengthy process which involved incorporating feedback received on matters related to revenue and taxation throughout the year from our members located across the country and input obtained from our member trade bodies, stakeholders, tax practitioners, knowledgeable people etc., through invitation of proposals, organizing workshops and holding a series of Budget Advisory Council meetings wherein these proposals were discussed in detail and some contradictory proposals were re-examined and final proposals were redesigned in line with the best interest of the country.   

    They informed that the FPCCI Budgetary document consists of three Volumes – Vol-I discusses issues / solution of macroeconomic nature ; Vol-II contains policy issues relevant to Taxation (Sales Tax, FED, Income Tax and Customs) ; while Vol-III contains Industry Specific Proposals received from FPCCI members .

    Moreover, the FPCCI would also submit its proposals to meet the challenges being faced by the trade & industry due to outbreak of COVID-19 as its severe and adverse impacts on various aspects of Pakistan’s economy is quite discern which may lead to negative growth rate, deterioration in current and fiscal balance, disruption in supply chain, increased unemployment etc.

    The FPCCI Chief Mian Anjum Nisar added, “The Macro Economic proposals contains long term action plan to boost exports ; promotion of Branding ; Enhancing SMEs sector ; Monetary Policy ; Creating Employment Opportunities through industrialization ; Taxpayers Bill of Rights ; Independent Tax Judicial System etc”.

    Zakaria Usman, Convener of the Budget Advisory Council disclosed, “In Direct Taxes, it has proposed to the Federal Board of Revenue (FBR) to reduce the tax rates to help increase competitive edge of indigenous products in both local and global markets; broadening of tax base; curtail parallel economy etc., as high tax rates provide incentives for tax evasion and corruption and results in high cost of doing business.

    At present the total numbers of NTN holders in Pakistan are over 4 million, however, the FBR has miserably failed to obtain return of income from such NTN holders and increase the number of active taxpayer during the last decade.

    They added that according to a study, 2.1 million Pakistanis (individuals) filed income tax returns in 2006-07 which shows that FBR during the last 14 years could not fetch much tax filers, despite prescribing higher withholding tax rates for non-filers”.

     “This underscores the need that FBR should conduct a study to find out what has gone wrong that even after penalizing the non-filers, they are happy to pay more by way of advance tax instead of filing returns”.

    He proposed that it is desirable that measures should be taken to facilitate to those, who are already existing taxpayers and contributing in the national tax pool in all manners, so that they become goodwill ambassador for FBR.

    “Resultantly, since many years, the registered taxpayers are less than 1 percent of the population of our country, which need to be enhanced”, he concluded.

  • Prolonged industry closure to be harmful: FPCCI

    Prolonged industry closure to be harmful: FPCCI

    KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI), the apex trade body of the country, urged the authorities to evolve strategy of functioning business activities during lockdown to prevent spread of coronavirus.

    FPCCI President Mian Anjum Nisar, while criticizing arrest of businessmen urged the relevant authorities to take serious notice of the situation.

    He also urged to devise Standard Operating Procedures (SOPs) to the trade and industry for smooth functioning as the economy of Pakistan may not face prolonged closure of the industry that will be harmful for the entire nations.

    He expressed serious concern over unfavorable behavior towards the trade and industry that are supporting the government to ensure economic sustainability in this crises where every segment of economy is suffering.

    He said that legal/representative forums are available to complaint against violation by any member of the business community. On the other hand the entire trade and industry has assured to the government for economic progress despite various challenges due to prevailing condition under COVID-19.

    However, such attitude discourages commercial activities to support the government policies and programs.

    Mian Anjum Nisar President FPCCI seriously expressed his concern over the arrest/detention of a member of the business community and termed it a discouraging environment for businesses where the industry is facing lot of challenges to compete and complete exports order that Pakistan needs to continue to bring foreign exchange through exports.

    He further told that the exporters are losing orders, nearly 70 percent export orders has been cancelled due to global environment and for completing remaining 30 percent we need to function smoothly adherence to health precautionary measures.

    But under such circumstances where industry has to be closed, no lay off labors, no facility for shipments, cash flow, banking and market obligation, how all these requirements could be met out when the authorities and agencies creating such problems of harassment and arrest/ detention of industrialists.

    He stated that at this time of global crises where most of the countries are losing trade and facing drastic decline in exports the government should follow policies that are favourable to industry and avoid from strict actions against trade and industry of the country.

    Those are following precautionary, safety and security measures at their factories to protect the environment from spread of virus may be supported uninterrupted production activities.

  • FPCCI calls for strategy to save national economy amid global meltdown on coronavirus epidemic

    FPCCI calls for strategy to save national economy amid global meltdown on coronavirus epidemic

    KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI), the apex trade body of the country, has urged the government to outline strategy to save national economy in the wake of global meltdown on coronavirus epidemic.

    FPCCI president Mian Anjum Nisar in a statement on Saturday urged the government to take preventive measures and develop strategy to protect the pace of economic and trade progress of Pakistan from likely impacts of world economic slowdown apprehended by leading think tanks due to the recent global spread of the novel coronavirus.

    Globally, more than 145,682 people have been diagnosed with coronavirus. The death toll above 5436, in China death toll 3173, South Korea, mass testing has turned up over 6,000 cases and more than 60 deaths.

    Italy has confirmed more than 17660 cases, along with more than 1200 deaths. Iran has announced 514 deaths and 11364 cases. The United States confirmed 41 deaths from the outbreak, along with more than 1264 confirmed cases.

    Mian Anjum Nisar said that in order to safe national economic system from the impacts of slowdown of world economy due to coronavirus and other global economic challenges government should announce economic relief package to protect trade and industry of the country. He informed that the Europe is now the “epicentre” of the global coronavirus pandemic.

    The Europe Union (EU) is the second biggest trading partner of Pakistan where around 20 percent of Pakistani exports have duty-free access to the Europe, while 70 percent avails preferential treatment.

    FPCCI under the current scenario has organized a consultative session seeking feeding back from the stake holders on likely impact of this coronavirus on Pakistan’s foreign trade.

    The session was attended by Dy. Governor SBP Dr. Murtaza Syed, Dr. S.M. Qaiser Sajjad Secretary General, Dr. Samreen Sarfarz Pakistan Medical Association, Dr. Adil H. Haider Dean Aga Khan Medical University, Dr. Ijaz, health department of Sindh Government, Aga Fakhar Hussain Additional Secretary Industry & Commerce Sindh, Dr. Saeed SINA Welfare Trust, Prof. Dr. Zarna Wahid, Dow University of Health Sciences, Pakistan National Shipping Corportation and KPT. The session was chaired by Sheikh Sultan Rehman Vice President FPCCI.

    The chief of the apex trade body also informed that the US Congress has voted for a US $ 50 billion emergency funding package to fight the coronavirus. Several central banks around the world, including the U.S. Federal Reserve, have lowered interest rates to support their economies amid the coronavirus outbreak. Lowering interest rates make borrowing costs cheaper and could encourage business to take loans and spend which will in turn stimulate the economy. He further stated that the IMF is making available US $ 50 billion in emergency funding to help poor and middle-income countries.

    Mian Anjum Nisar President FPCCI emphasized that as the inflationary trend shows declining that support to reduce interest rates while on the other hand to boost and safe economic activity all segment of economy needs to be supported and facilitated to contribute in economic growth.

    Other- wise we will again face economic crises, lower industrial growth and shifting of industrial units in sick industry. Government should also reduce the cost of doing business and encourage the domestic & foreign investors to make investment in country at this critical time when the global economy is shrinking.