ISLAMABAD: Pakistan’s gold import bill soared by 107 per cent during first seven months (July – January) 2022-2023, according to data released by Pakistan Bureau of Statistics (PBS).
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Pakistan signs deal to explore largest gold reserves
ISLAMABAD: Pakistan on Sunday signed a new agreement on a framework to reconstitute the Reko Diq project and a pathway for Antofagasta to exit the project.
Finance Minister Shaukat Tarin said at a press conference. He said Governments of Pakistan and Balochistan, Antofagasta plc, and Barrick Gold Corporation have reached agreement in principle on a framework to reconstitute the Reko Diq project, and a pathway for Antofagasta to exit the project.
Addressing a hurriedly called press conference along with the Energy Minister Hammad Azhar and Chief Minister Balochistan Mir Abdul Quddus Bizenjo here, the minister said after the new development, Pakistan would not only avoid the $11 billion penalty but also get an opportunity of exploring the world’s largest gold and copper reserve.
READ MORE: Pakistan’s CAD mounts to $12 billion in eight months
He said some $10 billion would be invested under this project which would create 8000 new jobs for locals.
The minister said as per the new agreement, Barric Gold would retain 50 per cent share, while government of Balochistan would get 25 per cent share, and the rest 25 per cent share would be attributed to the State Owned Enterprises Oil and Gas Development Company (OGDCL), Pakistan Petroleum Limited (PPL), and Government Holdings Pakistan (GHPL).
Tarin said an agreement was signed in 2006 among a Canadian Company Barrick Gold, a Chilean company Antofagasta plc, and governments of Pakistan and Balochistan to extract gold and copper from the Reko Diq minses reserve.
READ MORE: Foreign investment into Pakistan surges by 131%
As per the old agreement, 37.5 percent share each was given to the two foreign companies and 25 percent share was to given to Goverment of Blochistan.
The agreement was suspended in 2011 due to a dispute over the legality of its licensing process. As a result the International Court of Arbitration leveled $6.4 billion award on government of Pakistan while on the same time the London Court of Arbitration was also imposing another $4 billion fine on Pakistan.
He said soon after taking over the charge, Prime Minister Imran Khan aggressively pursued the case and directed to draw a suitable solution as early as possible.
As a result an agreement was settled today under which Antofagasta decided not to participate in the reconstituted project and withdrew from its claim of $3.9 billion in place of $900 million.
He informed that the $900 million would be paid by the three SOEs and in return they would get the 25 per cent share of the project.
Had the PM not taken his personal interest in the case, Pakistan would have to pay the huge amount of $11 billion as a penalty, he added.
Shaukat Tarin said Pakistan and Balochstan would be benefited for over 100 years from this project and the total worth is estimated to be over $100 billion.
Terming the new agreement as a land mark achievement for Pakistan, Hammad Azhar said it was a historic day as it had not only avoided $11 billion worth of penalty but also created a new opportunity for Pakistan.
He said this was not for first time the PTI government had achieved the landmark success, but it had also avoided the country from moving to FATF black list by implementing 32 out of 35 conditions. The government also saved billions of dollars by renegotiating the costly IPP agreements.
The minister informed that according to the Barrick Gold, Reko Diq was the only one part with such huge gold and copper reserves. There were also other reserves in the area.
So a lucrative mining cluster is going to be developed in Pakistan, he added.
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KCCI proposes regularizing gold, jewellery sector
KARACHI: Karachi Chamber of Commerce and Industry (KCCI) has submitted proposals to tax authorities for regularizing gold and jewellery sector.
In its proposals for budget 2020/2021, the KCCI said that gold and Jewelry sector has always been a neglected and largely unregulated sector.
No clear policy on import of Gold and precious metals has been formulated while also the export of finished Jewelry has no incentives.
There is a massive demand and consumption of gold, silver and gems in Pakistan and annual consumption of gold is estimated at 160.0 metric tons.
The chamber said that the demand is met mostly by undocumented sector because the foreign exchange is not provided by State Bank of Pakistan for import of gold.
Clause under Serial.No.16 of Part II of Import Policy Order 2016, which deals with import of Gold and Silver, stipulates the condition ‘Importable subject to the condition that importer shall arrange his own foreign exchange for the purpose’.
But there is no provision under the Foreign Exchange Rules which provides the necessary procedure to allow the importers to arrange own foreign exchange and remit the same to the supplier.
This has resulted in smuggling and undocumented trade in Gold, and a major sector which has immense potential for exports and revenue generation is suffering with rapid decline.
Thousands of goldsmiths, artisans and workers have lost their jobs. This sector has the capacity to produce high quality gold ornaments and designer jewelry for export.
The Karachi Chamber proposed that the sector can be a major employer and source of revenue if appropriate policy governing import of precious metals, documentation of sales and rational tax rates are implemented in consultation with stake holders.
Import of Gold and Silver may be allowed against payment in foreign exchange arranged by importers through local market (exchange companies and banks). Necessary legislation may be promulgated to legalize the jewelry trade.
It will help in curtailing smuggling of gold, silver and gems. Further, jewelry trade will be documented because if the import is legalized then the subsequent entities in supply chain will be documented.
Besides, this will unleash the potential of a large sector to contribute in growth, employment of highly skilled workers and export of Jewelry.
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FBR recommended CNIC condition on sale of above 10 tola gold
KARACHI: Federal Board of Revenue (FBR) has been urged to fix the condition of Computerized National Identity Card (CNIC) on purchase of around 10 Tola or above of gold.
Karachi Chamber of Commerce and Industry (KCCI) in proposals for budget 2020/2021 submitted to FBR, said that during last two years, prices of gold has sharply increased and the amount of Rs.50,000 is quite irrational and unfair due to high value of precious metal.
Only 7 grams gold jeweler will cost more than Rs.50,000, the KCCI said.
Highlighting the impact, the KCCI said that the customers will deal directly with unorganized sector / workshops
– Mostly undocumented jewelers benefit from requirement of CNIC for purchases above Rs.50000/-
– Will encourage under reporting of transactions
– Will result in loss of taxes to government
The chamber therefore proposed that the issue may been seen realistically and condition of NIC be imposed on purchase of 10 tolas or more.
It will boost official business activities and will also generate and promote economic activities besides generating revenue for the government as well.
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Import, export of gold prohibited under foreign exchange laws
KARACHI: The import and export of gold are prohibited, except with the general permission, under updated foreign exchange manual issued by State Bank of Pakistan (SBP).
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FTO directs FBR, FIA to launch inquiry in misuse of gold, jewellery import
ISLAMABAD: Federal Tax Ombudsman (FTO) in a suo moto case directed tax authorities and investigation agency to launch inquiry against officials, department and traders involved in misuse of gold import and other precious metals.
The FTO asked the Federal Board of Revenue (FBR) and Federal Investigation Agency (FIA) to initiate inquiry against all the officers, departments and importer/exporters involved in misuse of import-cum-exports’ facility in respect of gold, jewellery and other precious metals resulting in massive loss of revenue to national exchequer.
The FTO finding revealed that gold worth billions of rupees was either not exported against imported gold or was exported against fake form-E.
The FTO observed that the export promotion scheme did not put in place institutional mechanism to stop abuse of entrustment scheme/self-consignment scheme regulated through concessional SROs issued by the ministry of commerce.
“As a consequence, the importers-cum-exporters deceived the departments with impunity especially in cases where concession available under the entrustment scheme/self-consignment scheme was misused.”
The entrustment scheme provides facility for export of jewellery against imported gold supplied as partial advance payment, by the foreign buyer to be used in the manufacture of jewellery to be exported.
The exporter is required to export eligible and authorized items within 120 days from the date of import.
Under self-consignment scheme export of gold jewellery is made from locally procured gold and gemstones and sale proceeds are realized in foreign exchange.
According to the scheme the registered exporter shall apply to the Trade Development Authority (TDAP) for export authorization.
The sale proceeds shall be realized within 120 days from the date of export and the commercial banks shall ensure that sale proceeds are repatriated in full within 120 days; otherwise, commercial banks shall inform State Bank of Pakistan (SBP) as well as to TDAP.
The FTO observed that during special audit, the Directorate General of Internal Audit detected serious regularities of Model Customs Collectorate (MCC) Peshawar, MCC (Export) Port Qasim, Karachi, MCC Islamabad and MCC Preventive Lahore.
It was further observed that repeated exports were made by exporters.
Admittedly, foreign exchange was not repatriated against Form-E which subsequently turned out to be fake.
“Ignoring the said fact, there is no explanation that how subsequent exports were allowed when it was evident that foreign exchange was not repatriated within the specified period.”
“This reflects the negligence, intention and ineptitude in discharge of duties and responsibilities,” the FTO observed.
The FTO further observed that it was rather strange that the collectorates had failed to recover the adjudged amount of the fine imposed on the clearing agents, who are, otherwise, licencee of the department.
Perusal of record shows that either no stay had been granted or the period for stay of order under appeal had been lapsed. But the department had not initiated recovery proceedings for which no explanation could be advanced.
“This again reflects negligence, inattention, inefficiency and ineptitude in discharge of duties and responsibilities by concerned officers/officials of the department which are tantamount to maladministration.”
The FTO further said that the position emerged on the basis of information provided by TDAP and SBP, reveals that there is a gap between the value of import and value of export and lack of data synchronization related to data provided by the TDAP and SBP.
It appears that the TDAP has not put in place any mechanism of monitoring and reporting of exports and imports taking place under SRO 760(I)/2013 dated September 02, 2013. In the absence of authentic and complete data of import and exports under the said SRO, no meaningful analysis can be carried out.
The FBR recommended to the FBR to direct the chief collectors (North), (Central) and (Enforcement) South to initiate departmental enquiry to ascertain the officers/officials and take disciplinary action against those found involved in illegal/inadmissible import/exports.
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Reduced sales tax rates on supply of gold, jewelry imposed
The Federal Board of Revenue (FBR) has introduced significant amendments through the Finance Act, 2019, bringing gold, jewelry, and other precious articles into the sales tax ambit by implementing reduced rates on supplies.
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