KARACHI: Federal Board of Revenue (FBR) to generate additional revenue of Rs733.47 billion during current fiscal year after abolishing zero-rating of sales tax and other policy and administrative measures.
(more…)Tag: International Monetary Fund
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Prize bonds, bearer instruments to be registered
KARACHI: Pakistani authorities have assured International Monetary Fund (IMF) of registering prize bonds and other bearer instruments to eliminate the use of these instruments in potential illegal activities and tax avoidance.
The IMF issued Pakistan country report on Monday following successful $6 billion loan program.
In order to make the program successful the Pakistani authorities had assured the fund of strengthening governance and the control of corruption.
The priorities include:
Strengthening the effectiveness of anticorruption institutions. A national committee has been established to implement the recommendations from the UNCAC 2017 report.
A task force will review the institutional framework of the anticorruption institutions to enhance their independence and effectiveness in investigating and prosecuting corruption cases.
A study will be conducted on establishing a dedicated AML unit in the Federal Investigation Agency (FIA). Upgrading the financial investigation capacities of law enforcement agencies will be also prioritized.
Moreover, the authorities are pursuing agreements on information exchange with foreign countries to complement efforts to recover unlawful assets.
An Asset Recovery Unit in the Prime Minister’s Office is cooperating with the FBR’s International Taxation Unit in identifying assets abroad owned by Pakistani residents, in line with the OECD Convention on Mutual Administrative Assistance on Tax Matters.
Advancing anti-corruption efforts through the enhanced used of AML tools, including by (i) ensuring that banks and other reporting institutions improve their capacities to identify politically exposed persons and apply enhanced due diligence measures and (ii) providing adequate resources to the Financial Monitoring Unit to improve the dissemination of financial intelligence that can be used to support corruption investigations.
Moreover, asset declarations of high-level public officials will be comprehensive in scope (i.e., assets beneficial owned or located abroad), filed with a central federal agency, electronically searchable, and appropriately verified.
“Registering prize bonds and other bearer instruments to eliminate their use in potential illegal activities/tax avoidance,” the report said.
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Key points of Pakistan’s revenue driven fiscal consolidation
KARACHI: The International Monetary Fund (IMF) has highlighted points of Pakistan’s budget 2019/2020 which envisaged a substantial revenue driven fiscal consolidation.
“The FY 2019/20 budget envisages a substantial fiscal consolidation. The primary deficit is expected to decline to 0.6 percent of GDP, from estimated 1.8 percent of GDP in FY 2018/2019,” the IMF said in the country report on Pakistan issued on Monday after a successful $6 billion loan program for the country.
The report said that the envisaged fiscal consolidation will be largely revenue driven:
a) Sales tax measures are mostly focused on simplifying the system by eliminating numerous exemptions and preferential rates and enhancing the sales tax of petroleum products. In particular, exemptions granted to four export-oriented sectors for domestically sold products will be eliminated, together with non-essential food related products exemptions.
Moreover, preferential rates related to sugar, steel sector, edible oil, medium and large retailers will also be eliminated and aligned with the standard 17 percent sale tax rate.
b) Income tax measures will aim at widening the tax base and closing the loopholes that are fostering tax avoidance.
The income tax threshold will be reduced for salaried and non-salaried individuals to PRs 600,000 and PRs 400,000 respectively, and the tax rate at the top of income distribution increased.
The collection of withholding tax on telecom services that had been stalled in the court will be resumed, and tax credit available for machinery investment and to non-profit organizations will be rationalized.
The FBR will also align the value of immovable properties with market rates and specify conditions under which the long-term lease hold will be considered as the purchase of property.
In addition, the minimum tax rate will increase and taxation of gifts from unrelated persons will be introduced.
c) Federal excise duties on certain products will be introduced or increased (cigarettes, sugary drinks, cement); while
d) custom duty measures will eliminate the exemptions on import of liquified natural gas and increase the additional custom duty for finished and luxury goods.
e) Revenue administration measures will support policy implementation. The emphasis will be given to the modernization and digitalization of FBR functions, improvement of the database and the streamlining of legal procedures.
To strengthen the collection of excises on cigarettes and eliminate illicit trade, the track-and-trace system will we implemented in the second quarter of the year.
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Pakistan assures IMF of strengthening taxation on real estate, agriculture income
KARACHI: Pakistan has assured International Monetary Fund (IMF) of removing distortion in taxation system and strengthening taxation on real estate and agriculture income.
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IMF approves $6 billion loan for Pakistan
ISLAMABAD: The International Monetary Fund (IMF) has approved a 39-month extended arrangement for Pakistan under which the country will get $6 billion to support the economic reform program, said a statement.
After approval of the loan under Extended Fund Facility (EFF) by the Executive Board of IMF, Pakistan is now eligible to immediately receive first tranche of $1 billion, the IMF statement said.
The fund will quarterly review the performance of Pakistan over 39 months.
The EFF-supported program would help Pakistan to reduce economic vulnerabilities and generate sustainable and balanced growth.
The statement added that the programme would focus on a decisive fiscal consolidation to reduce public debt and build resilience while expanding social spending.
It will also try to ensure a flexible, market-determined exchange rate to restore competitiveness and rebuild official reserves besides eliminating quasi-fiscal losses in the energy sector, strengthening institutions and enhancing transparency.
Meanwhile, Advisor to Prime Minister on Finance Dr Abdul Hafeez Shaikh said the IMF’s support bodes well for the country and is a testament to the government’s resolve for ensuring financial discipline and sound economic management.
Welcoming the IMF approval of $6 billion loan for Pakistan, Hafeez Shaikh said in a tweet that structural reform agenda which includes improving public finances and reducing public debt through revenue reforms is key part of the program.
“Our program supports broad based growth by reducing imbalances in the economy. Social spending has been strengthened to completely protect vulnerable segments”, the advisor added.
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IMF ready to support Pakistan: Christine Lagarde
KARACHI: International Monetary Fund (IMF) is ready to support Pakistan in a difficult economic situation, Christine Lagarde, Managing Director of IMF said on Sunday after meeting with Pakistan’s Prime Minister Imran Khan.
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