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  • FPCCI denounces super tax imposition

    FPCCI denounces super tax imposition

    KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has denounced the imposition of super tax by the government to generate additional revenue.

    FPCCI acting president Shabbir Mansha denounced imposition of 10 percent super tax on large industries; which already pay hefty corporate tax of 29 percent and generate millions of jobs in the country as well.

    READ MORE: Pakistan stocks crash on super tax imposition

    “No country in the world can charge 39 percent tax to corporations and still keep the economy afloat, he added. Additionally, new private-sector and foreign investments dry up completely in an uncompetitive market.”

    Shabbir Mansha explained that industries affected will include all major industries; namely, cement, steel, sugar, oil and gas, fertilizers, LNG terminals, textiles, banking, automobiles, cigarettes, beverages, chemicals and airlines – and, these are 13 industries in total. Furthermore, all the remaining industries will be subjected to 4 percent additional tax.

    READ MORE: Pakistan slaps super tax on industries, individuals

    Acting FPCCI Chief also expressed his shock that the federal budget 2022 – 23 was announced just two weeks back and it mentioned no super tax on industries. It is a highly abrupt, unfortunate and anti-industry measure.

    Mansha reiterated FPCCI’s stance that the government should not squeeze the existing taxpayers further and look for the avenues to broaden the tax net; as that is the only practical and sustainable way to generate more taxes without hurting the industries, exports, employment and the economic growth.

    He noted with profound concern that Pakistan Stock Exchange (PSX) was unnerved on the decision and the trading had to be suspended on Friday after KSE-100 index lost 2,055 points or 4.81 percent in a quick span of merely 20 minutes.

    Mansha emphasized that the cost of doing business is already at an all-time-high in the country and the interest rate of 13.75 percent will not let the economy grow at any meaningful rate; and, prices of electricity and gas have already made us uncompetitive as far as the exports are concerned.

    Additionally, there are rumors that interest rate may be further raised. He added that the government should also consult with the stakeholders in business, industry and trade on how and when interest rate can be brought down; so that, businesses can plan their year ahead accordingly.

    READ MORE: Key tax measures taken through Finance Bill 2022

    Mansha emphasized that imposition of PDL – though in a phased manner – will totally destroy the cost of doing business competitiveness and will fuel the inflation like never before through its multiplier effect. He demanded that the government should take business community on board on its commitment with IMF on PDL.

    Acting FPCCI Chief has also stressed upon the need to start a consultative process with the stakeholders on the implementation status of hike in electricity base tariff; impending PDL imposition and new or additional taxes as these costs will cumulatively destroy the business sentiment and industry will come to a halt.

    READ MORE: FPCCI identifies tax anomalies in budget 2022-2023

  • FPCCI identifies tax anomalies in budget 2022-2023

    FPCCI identifies tax anomalies in budget 2022-2023

    KARACHI: Federation of Pakistan Chamber of Commerce and Industry (FPCCI) has identified anomalies in the federal budget 2022-2023.

    In a statement issued on Wednesday, Shabbir Mansha, Acting President FPCCI, expressed his profound concerns on the glaring anomalies in the federal budget 2022 – 2023.

    “We have noticed anomalies in custom duties, regularity duties, income tax and sales tax,” he added.

    READ MORE: Pakistan announces massive tax reduction for salaried persons

    Mansha noted that turnover tax of 1.25 percent for traders, distributors and dealers is unbearable as profit margins are barely 2 percent in market sales and the turnover tax will continue to discourage SMEs to be registered in sales tax.

    Acting FPCCI Chief pointed out that 4.5 percent withholding tax on local sale; but, normally trade margins are between 2 – 3 percent and there is no way a business can absorb 4.5 percent withholding tax and continue to operate viably. Therefore, sellers find it more viable to buy goods at 20 percent taxes; when accounted for additional duty of 3 percent on commercial importers on top of 17 percent sales tax and delist from the sales tax.

    READ MORE: Pakistan reduces salary tax slabs to 7 in budget 2022/23

    He demanded that disparities in the rates of sales tax on raw materials at import stage between commercial and industrial importers. The FPCCI chief maintained that under section 8 (b) of sales tax act 1990, input tax adjustment in excess of 90 percent of the output tax is not allowed. This condition should be withdrawn; as the same has been already extended to companies operating in various sectors. Furthermore, withholding tax on import of raw materials should be the same for industrial and commercial importers.

    READ MORE: Massive cut in subsidies to curtail current expenditures

    Mansha has proposed that at the stage of deregistering from the sales tax system, the condition of prior audit should be withdrawn to facilitate exit after three years; provided a company, individual or association of persons (AOP) was filling a null return for the past five years due to discontinuation of their businesses.

    On the withdrawal of NIC condition through amending the section 23(I)(b), FPCCI has appreciated the government; but, maintained that the Finance Bill 2022 should categorically state that no NIC would be required for sales to non-filers.

    Mansha also raised the issue of 12 percent tax under section 233(1). Additionally, freight and transportation charges under section 153(1)(b) at 3 percent should only be applied on final tax region.

    READ MORE: Petroleum levy to generate Rs750 billion

  • Move to legalize cryptocurrency trading in Pakistan

    Move to legalize cryptocurrency trading in Pakistan

    KARACHI: Pakistan apex trade body has moved a proposals to authorities to legalize cryptocurrencies in the country.

    In this regard, the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has recommended changes in tax laws to bring cryptocurrencies under tax net

    The FPCCI recommended capital gain tax (CGT) at 15 per on income derived from disposal of cryptocurrencies.

    READ MORE: FPCCI suggests amnesty for cryptocurrency declaration

    It further suggested that Pakistan must develop a regulatory framework and national cryptcurrency strategy.

    “Cryptocurrencies should be defined among securities under Section 37A of Income Tax Ordinance, 2001 under which assets are charged at the rate of 15 per cent.” The Section 37A of the Ordinance deals with the collection of capital gain tax on disposal of securities.

    The apex trade body also recommended imposition of withholding tax at the rate of one per cent, which should be adjustable, on transactions of cryptocurrencies.

    READ MORE: FPCCI protests over advisory council formation

    The FPCCI suggested a one-time asset declaration scheme must be launched. The scheme should include encashment of cryptocurrencies in Pakistan and converting the foreign exchange into the Pak Rupee may be allowed with no tax.

    Further, it may be made mandatory the encashment of cryptocurrencies in Pakistan and held as deposit in foreign exchange accounts in Pakistan should be allowed with a rate of tax at five per cent.

    The FPCCI further suggested related to the scheme that the encashment of cryptocurrencies in Pakistan and held as deposits in Roshan Digital Accounts should be allowed with 10 per cent tax for non-resident Pakistani nationals / dual nationals. “Holding of cryptocurrencies as an asset may be allowed to be declared on payment of 15 per cent tax,” it recommended.

    READ MORE: FPCCI demands reducing income tax slabs to five

    Giving the proposal to bring virtual currency under the tax net, the FPCCI said investment in cryptocurrencies started with speculative gaming but in recent years it had grown into humongous size. These assets which reside in digital clouds, need to be landed safely into the economic mainstream.

    “The total trading value of Pakistani investors touched $20 billion in 2020-21 and the country ranked third in the Global Crypto Adoption Index,” the FPCCI said.

    The apex trade body pointed out that recently the finance minister of India in her budget speech 2022 proposed to tax crypto-assets by 30 per cent on profits that occurred through transactions and 1 per cent TDS on every transaction of cryptocurrencies.

    READ MORE: Cryptocurrency, best performing assets in Pakistan

    Giving rationale to the proposal, the FPCCI said that virtual assets in countries like India, Thailand, Malaysia, UAE and many other countries are covered under tax laws which allow them to generate an additional revenue stream. “Coverage of these assets under the income tax regime in Pakistan will also help mobilize additional tax revenues,” it added.

  • Pakistan braces for worst food inflation: FPCCI

    Pakistan braces for worst food inflation: FPCCI

    KARACHI: Pakistan is heading towards the worst food inflation amid hike in tariff of electricity and increase in prices of petroleum products, the apex trade body said on Friday.

    READ MORE: FPCCI demands fixed tax regime for retailers

    Suleman Chawla, Acting President of Federation of Pakistan Chamber of Commerce and Industry (FPCCI), in a statement on Friday expressed the shock and awe of the entire business, industry and trade community at the unprecedented, one-tranche and massive electricity tariff hike of Rs. 7.91 / kWh; resulting in Rs. 24.82 / kWh base tariff for the year 2022 – 23, while it was Rs. 16.91 / kWh for the outgoing year 2021 – 22.

    It is a rate hike of a staggering 47 percent by NEPRA; and, it will jolt the cost of doing business and ease of doing business indices, he added.

    READ MORE: FPCCI demands CNIC condition withdrawal

    Suleman Chawla explained that the cumulative effect of the fuel and power rate increase my unleash a historical economic stagnation; and, will result in a lot of bankruptcies, inevitable defaults on account of electricity bills, many export orders would not be fulfilled, huge loss of employment opportunities and loss of tax revenue will follow.

    Acting FPCCI Chief added that inflation has already climbed to 13.8 percent, which is a 30-month high; and, with accounting for the latest developments, it is slated to cross 20 percent in a short span of 4 – 8 weeks.

    READ MORE: FBR urged to wave further tax on providing CNIC number

    Chawla apprised that the collective price spirals through combined multiplier effects of fuel and power prices will affect the masses the worst through food inflation; who will be further hit by impending unemployment. Hence, the government should come up with a protective mechanism for SMEs in consultation with the apex chamber; as SMEs are the real engines of growth and employment generation.

    Dissecting the main contributing factors in the power tariff hike, he enlisted rising fuel prices, capacity costs & challenges, transmission & dispatch (T&D) losses and rupee devaluation – which all can be dealt with better management and planning.

    READ MORE: Tax exemption sought for plant, machinery import

  • FPCCI demands fixed tax regime for retailers

    FPCCI demands fixed tax regime for retailers

    KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has demanded the government of a fixed tax regime for retailers.

    In a statement the FPCCI reminded the finance minister on his promised position to introduce simplified taxation regime on fixed rate basis for the category of the retailers other than the tier-1 retailers, as is specified for the conditions.

    READ MORE: FPCCI demands CNIC condition withdrawal

    Suleman Chawla, Acting President FPCCI & Engr. M. A. Jabbar, Vice President of FPCCI, who has attended the meeting with the finance minister regarding budgetary proposals, had also discussed the imperative need of broadening the tax net through bringing in the documentation for retailers; other than the tier-1; by providing simplified taxation regime on a fixed tax rate basis.

    Suleman Chawla, while appreciating the finance minister on the due and required offer of introducing the fixed tax regime for small retailers, has appreciated the applied mind to contain the agitations, controversies, conflicts and contradictions; as being witnessed, including the small businessmen and retailers sit-in around Federal Board of Revenue (FBR) and agitating against tax officers.

    READ MORE: FBR urged to wave further tax on providing CNIC number

    They said that the first and the foremost motive and objective before the Finance minister should be to silent the conflicts arising out of forced documentation through statutes and manufactured harassment and notices at large issued by FBR functionaries in almost all over Pakistan.

    In this regard, FPCCI has received several complaints from its member bodies represented by small traders’ associations and chambers that they would like to be documented in the non-humiliating manner; the first step of which is through a simplified tax regime.

    READ MORE: Tax exemption sought for plant, machinery import

    FPCCI believes that, by initiating simplified and fixed tax regime, the present government will increase the revenues and the businesses shall be conducted in harmony; instead of amidst conflicts and contradictions.

    Moreover, the logical approach of broadening the tax net is highly necessary through the simplified fixed tax regime in a highly non-documented economy; wherein, the sales tax registered entities have not even reached two hundred thousand.

    To gradually put these people into the tax net will move towards increasing the documentation in a highly improportionately taxed economy; whereas, the manufacturing sector of less than 13 percent of GDP is bearing the brunt of highest taxation of 58 percent of the total tax generation.

    Suleman Chawla invited the attention of FM that two decades back the earlier government of biggest coalition partner of the present dispensation had introduced trade enrolment certificates to gradually bring the small retailers and businessmen into the tax net; which was later turned into total taxation of 0.75 percent of the turnovers – including sales tax & income tax.

    READ MORE: Proposed list of higher withholding tax rates for non-filers

    He further said that the well-thought-out moves of political governance in respect of measures to bring in small retailers and businessmen into the tax net through simplified and fixed tax regime was not promoted by bureaucracy; which later on caused the agitations and sit-ins.

    Acting President & VP FPCCI have appealed to the FM that his promised position during the meeting with the delegation of FPCCI should be given due consideration by incorporating the simplified and fixed tax regime for retailers and small businessmen other than tier-1; so that, agitations would come to an end and tax collection will be increased.

  • FBR to install more scanners for customs clearance

    FBR to install more scanners for customs clearance

    KARACHI: The Federal Board of Revenue (FBR) will add more scanners for digitization of customs clearance, said Wajid Ali, Chief Collector, MCC Appraisement (South) Karachi.

    Addressing at Federation of Pakistan Federation of Pakistan Chambers of Commerce and Industry (FPCCI) on Friday, he said that more container scanners will added on a regular basis and customs is moving towards best-practices in digitalization; however, accepted that more work needs to be done to facilitate the traders.

    READ MORE: FBR promotes Customs officers to BS-19

    Agreeing to the top demand of FPCCI, Wajid Ali promised that the online complaint mechanism will be launched at Federation House to address all the issues, concerns and complaints of the business community pertaining to customs.

    It will not only promote the liaison between the customs department and the business community; but, will also expedite the complaints resolution process.

    The Chief Collector informed the session that Input/Output Co-efficient Organization (IOCO) has determined the quotas for the erstwhile FATA and PATA region; hence, its misuse will be eliminated.

    He also committed that refunds will be swiftly processed to facilitate the traders. He added that National Single Window (NSW) will contain HS Codes in 12 digits.

    READ MORE: FBR drafts ID evidence rules to subscribe Pakistan Single Window

    Wajid Ali has asked FPCCI to propose the inclusion of its representative into the classification committee and apprised that Alternative Dispute Resolution Committee (ADRC) will also be refreshed.

    He also welcomed the recommendations of appointing a focal person for FPCCI for the greater good of business community; more proactive 90-day advanced rulings and effective implementation of protections covered under SRO 598 to already issued Bill of Lading and Letter of Credit.

    Earlier, Irfan Iqbal Sheikh, President FPCCI, discussed the issues and anomalies endured by the business community with top customs officials in a detailed session at Federation House.

    He enlisted that lack of regulation of container terminals; misuse of erstwhile FATA and PATA exemptions; delay in refunds processing; unfair demurrages charges; insufficient investment into digitalization & container scanners; inadequate diversification in HS and PCT Codes; overlooking cascading principle on raw materials and irregular consultative process with the trading community’s stakeholders are the top impediments in the smooth functioning of the customs operations.

    READ MORE: Trade Information Portal of Pakistan

    Sheikh demanded formation of a regulatory authority for container terminals for a better working environment between traders and container terminals.

    He also expressed his profound concerns over misuse of erstwhile FATA and PATA exemptions as the phenomenon has disturbed the even-playing-field.

    Sheikh also expressed his dismay over paying technology upgradation and container scanner charges since the year 2005; but, no wide-scale upgradation has taken place as yet. He also called upon customs authorities to adopt 16-digit HS Codes to cater to the diverse imports.

    Engr. M. A. Jabbar, Vice President FPCCI, pointed out that tariff rationalization should be an ongoing process to adapt to the ever-changing trade & industry environment and proposed that member policy of FBR should keep consulting the stakeholders.

    READ MORE: PSW to link 27 banks for trade facilitation

    Shabbir Hassan Mansha, VP FPCCI, demanded a focal person for FPCCI and also apprised the session that the business community faces delays in refunds as the pay orders are encashed without informing the traders; and, critical working capital is blocked due to the practice.

    Saqib Fayyaz Maggo, Convener Customs FPCCI, highlighted the lack of uniformity in the disposal of cases under Sections 81, 25A, 25D; on top of the excessive adjudication cases and ever-increasing demurrages charges.

  • FPCCI demands CNIC condition withdrawal

    FPCCI demands CNIC condition withdrawal

    KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) on Wednesday demanded the authorities to withdraw CNIC condition on transactions.

    FPCCI president Irfan Iqbal Sheikh categorically demanded that CNIC Condition needs to be withdrawn in the upcoming Federal Budget 2022 – 23 and the Finance Act 2022 for being counterproductive as it has failed to generate more taxes.

    READ MORE: FBR urged to wave further tax on providing CNIC number

    The CNIC condition has given a rise to the use of flying invoices and fake documentation.

    Nowhere in the world a buyer is asked to submit their NIC while making a purchase and the conditionality defies every administrative, regulatory, operational, commercial and economic sense, he added.

    Irfan Iqbal Sheikh maintained that introduction of CNIC condition was merely a part of political sloganeering at the cost of economy and now the same vested interests are propagating for its continuation; whereas, they have no understanding of the ground realities of business, industry and trade.

    READ MORE: Tax exemption sought for plant, machinery import

    Irfan Iqbal Sheikh added that FPCCI has also briefed Miftah Ismail, Federal Minister for Finance & Revenue, on the issue and how it is hampering the economic and commercial activities in the country.

    FPCCI Chief explained that this condition negatively affects the production and market sales of the businesses in Pakistan. He recalled that Chairman FBR visiting FPCCI did concede that due to the condition of CNIC there has been a drop in sales tax collection, during his visit in the year 2021.

    READ MORE: Proposed list of higher withholding tax rates for non-filers

    President FPCCI has added that the only workable solution to generate more taxes is to present a business-friendly and pro-growth budget in consultation with the stakeholders, i.e. businessmen, traders and industrialists.

    Irfan Iqbal Sheikh has reiterated, as President of the apex body, his resolve to play his mandated role of creating bridges and promoting cooperation between the business community and the government &its regulators from the platform of FPCCI.

    READ MORE: PSX demands slashing CGT rates on disposal of shares

  • FPCCI suggests amnesty for cryptocurrency declaration

    FPCCI suggests amnesty for cryptocurrency declaration

    KARACHI: Federation of Pakistan Chamber of Commerce and Industry (FPCCI) has recommended the government to launch an amnesty scheme of asset declaration for cryptocurrencies.

    The FPCCI, which is the apex trade body of the country, in a letter to Prime Minister Shahbaz Sharif suggested measures to improve foreign exchange reserves.

    READ MORE: FPCCI protests over advisory council formation

    It said: “Investments in cryptocurrencies started with speculative gaming but in recent years have grown into humongous sizes. It is imperative for government authorities to first launch a one-time asset declaration scheme and devise a regulatory framework for future transactions.”

    Capital gain taxes, similar to stock market investments, should also be introduced which will provide an additional source of tax revenues for the country.

    READ MORE: FPCCI demands reducing income tax slabs to five

    The FPCCI suggested a mechanism for the proposed amnesty scheme, which included:

    i. Encashment of cryptocurrencies in Pakistan and converting the foreign exchange into the Pakistani rupee may be allowed with no tax.

    ii. Encashment of cryptocurrencies in Pakistan and held as deposits in foreign exchange accounts Pakistan may be allowed with a 5 per cent tax.

    iii. Encashment of cryptocurrencies in Pakistan and held as deposits in Roshan Digital accounts may be allowed with 10 per cent tax for non-resident Pakistani nationals/dual nationals.

    READ MORE: Tax slabs reduction may be considered: FBR chairman

    The apex trade body also advised the government to launch amnesty scheme to deposit dollars in local banks.

    It said that Pakistan’s total foreign exchange reserves have been depleting significantly since December 2021.

    The liquid forex reserves have reached the lowest level of US$ 17.01 billion in April 2022 since June 2020 (on weekly basis).

    READ MORE: High interest rate to destroy economy: FPCCI

    The reserves held by SBP are only enough to bear the imports bill for only two more months7. Increasing current account deficit and debt repayments (including repayment of the US$ 2.4 billion loan facility given by China) have eroded reserves significantly.

    The government should launch an incentive scheme to channelize dollar holdings from lockers and personal safes into bank accounts.

    The government may exempt such deposits from any taxes if these have not been declared earlier in tax returns which will be held in local accounts for at least one year.

  • FPCCI protests over advisory council formation

    FPCCI protests over advisory council formation

    KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has strongly protested over no consultation of industry in formation of economic advisory council by the new government.

    In a statement on Friday, FPCCI President Irfan Iqbal Sheikhhas expressed his shock over the formation of Economic Advisory Council under the leadership of Prime Minister Mian Shehbaz Sharif without consulting the business, industry and trade community of Pakistan.

    READ MORE: FPCCI demands reducing income tax slabs to five

    “We have also not given a representation in the council; and, it is counterproductive – to say the least,” he added.

    The FPCCI is the apex trade body of the country and represents chamber of commerce and trade associations across the country.

    Irfan Iqbal Sheikh maintained that FPCCI is the apex chamber of the country and its representation would provide the able and timely assistance to the Prime Minister and his economic team in the matters of budget-making; taxation and tariffs; governance & administrative reforms; rapid industrialization; textiles and allied industries; promotion of information and communication technologies; EPZs and SEZs; export growth & import substitution; rupee-dollar parity and SMEs.

    READ MORE: Tax slabs reduction may be considered: FBR chairman

    FPCCI President noted with concern that current account deficit (CAD) will be close to $20 billion, which is well above 5 percent of GDP; inflation has crossed 12 percent and heading towards 15 percent by the year end; trade deficit has crossed $35 billion in the nine months of July – March; KIBOR is 14.10 percent after 13 years and 6-month treasury bills at 14.99 percent after 22 years.

    “Interestingly, this is happening in spite of record proceeds from exports, remittances and taxes,” he added.

    READ MORE: High interest rate to destroy economy: FPCCI

    While proposing the imposition of an economic emergency a few days back, FPCCI President has also expressed his willingness to engage with the government in a productive consultative process to take on the economic challenges collectively in the broader national interest.

    However, Irfan Iqbal Sheikh has reiterated his stance that policies should not be announced in a vacuum without consulting the business, industry and trade community – as they are the real stakeholders in the economy.

    READ MORE: Political unrest dents foreign investors’ confidence: Nisar

  • FPCCI demands reducing income tax slabs to five

    FPCCI demands reducing income tax slabs to five

    KARACHI: Federation of Pakistan Chambers of Commerce and Industry (FPCCI) on Monday urged the government to reduce income tax slab to 5 – 7 from 11 slabs.

    FPCCI President Irfan Iqbal Sheikh proposed the simplification of personal income tax slabs down to 5 – 7 from the current 11 slabs. Interestingly, IMF has also recommended the same and can add up to Rs200 billion to the tax collection in a couple of years.

    READ MORE: Tax slabs reduction may be considered: FBR chairman

    FPCCI president said that the economic and business environment has reached a point where the business community finds the demand of imposing an economic emergency justifiable to put an end to the economic uncertainty. He added that businesses cannot operate profitably under such harsh and unfavorable conditions.

    Irfan Iqbal Sheikh emphasized that the policy rate must be aggressively brought down to 7 percent from its current level of 12.25 percent to make access to finance affordable for the private sector to keep the economic activities afloat.

    READ MORE: High interest rate to destroy economy: FPCCI

    He also noted that the step will bring down the short-term debt servicing of the government by Rs300 billion; and, provide breathing space to the government for the better fiscal management.

    Irfan Iqbal Sheikh noted with concern that the budgetary deficit is also increasing due to the incessantly loss-making State-Owned Enterprises (SOEs) and now it is absolutely imperative to reform and restructure them decisively; as their share in budgetary deficit has reached to 23 percent.

    READ MORE: Political unrest dents foreign investors’ confidence: Nisar

    He also called for an increase in FED on cigarettes and carbonated drinks to serve the dual purpose of generating revenues and protecting the general public in general and the workforce in particular from health hazards that have been unleashed on them by smoking and diabetes-causing sweetened drinks. He added that if FED is raised on cigarettes to 70 percent, Pakistan can generate up to Rs. 240 billion additional revenues.

    FPCCI President expressed his willingness to engage with the government in a consultative process to take on the economic challenges collectively in the broader national interest. However, he reiterated his stance that policies should not be announced in a vacuum without consulting the business, industry and trade community – as they are the real stakeholders.

    READ MORE: FPCCI proposes charter of economy to new government

    Additionally, he called for a pro-business federal budget 2022 – 23; enabling the private sector to invest in the economy, set up new industry, increase exports on an expedited rate, generate employment and contribute towards revenue collection in a healthy manner.