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Tag: Karachi Chamber of Commerce and Industry

  • KCCI suggests VAT removal for commercial importers

    KCCI suggests VAT removal for commercial importers

    Karachi Chamber of Commerce and Industry (KCCI) has suggested the tax authorities to withdraw Value Added Tax (VAT) imposed on commercial importers in order to rectify anomaly in the law.

    The KCCI in its proposals for budget 2022/2023 submitted to the Federal Board of Revenue (FBR) said that a three per cent value addition sales tax at import stage on commercial importers of raw materials was removed in the Finance Act 2019-20 after long deliberations with FBR and Ministry of Finance for several years.

    READ MORE: FPCCI demands CNIC condition withdrawal

    It was agreed by FBR that the tax is unjustified because commercial importers do not add any value to raw materials. It is sold to SMEs without any change in form or any process. No inputs such as gas, electricity, labor or machinery are used hence 3 per cent VAT was an obvious anomaly.

    Unfortunately, the very next year through Finance Act, 2020, amendment was made in the Twelfth Schedule to Sales Tax Act, 1990 –under the heading “Procedure and Conditions”, in condition (2), 3 per cent value addition sales tax has been imposed again on commercial import of industrial raw materials, thus restoring the anomaly.

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

    Also, after re-imposition of this 3 per cent VAT, the exclusion from Section 8 B (1) 2, provided to commercial importers under SRO 647 (I) 2007 was not restored. This has led to double taxation as importers are forced to pay extra 10 per cent value addition over and above 3 per cent paid at custom stage.

    The outcome of these amendment resulted in dual anomaly in the Finance Bill, 2020-21.

    A 3 per cent VAT cannot be imposed on raw materials where no value is added.

    READ MORE: Tax exemption sought for plant, machinery import

    Restriction of 90 per cent adjustment of input is tantamount to double taxation as importers of raw material forced to pay extra 17 per cent (10 per cent of 17 per cent) value addition over and above three per cent paid at customs stage under Section 8B of Sales Tax Act, 1990 through SRO 1190 (I)/2019.

    The KCCI said that this obvious anomaly should be rectified and raw materials imported by commercial importers shall be excluded from the scope of condition (2) under “Procedures and Conditions”   Twelfth Schedule of Sales Tax Act. Thus removing 3 per cent Value Addition Sales Tax on commercial importers which was re-Imposed unjustly.

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

    Importers of Finished products paying 3 per cent VAT at custom stage and having no local purchase should be excluded from application of Sec 8 (B).

    The proposed amendment will remove an obvious anomaly and disparity in rates of sales tax on raw materials because all raw materials are ultimately consumed in the industry, and mainly by SMEs.

  • BMG chairman urges end to political war

    BMG chairman urges end to political war

    KARACHI: The chairman of Businessmen Group (BMG), Zubair Motiwala, on Wednesday urged the political parties to end ongoing political war for sake of the country.

    He expressed deep concerns over the ongoing and never-ending political brawl in the country, cautioned that this tussle has created a disastrous situation for Pakistan’s economy which was already in an awful state and the business and industrial community fears that the situation would worsen further if all political parties do not bother to realize the gravity of the situation and continue to blame each other.

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

    Chairman BMG, in a statement, pointed out that the widespread propagation of political battling in the mainstream and social media was sending a very negative message to the rest of world by portraying Pakistan as an extremely unstable country which was neither in favor of the country nor in favor of political parties.

    Political war was the only thing visible nowadays in the mainstream and social media while the pressing economic issues were being ignored that has led to plunging the economy way back into deep crises. “All of us must realize that our existence depends on Pakistan’s existence. Hence, the political differences must set aside and all political parties must make collective efforts to bring the economy out of crises”, he stressed, adding that it was high time that all political parties must jointly devise and agree upon the desperately needed ‘Charter of Economy’ which the Karachi Chamber has been demanding since long.

    READ MORE: Tax exemption sought for plant, machinery import

    Zubair Motiwala said that regardless of political differences, the economic policies once agreed upon and implemented under the Charter of Economy must remain intact and all political parties must remain on one page as far as the economy was concerned. “Instead of politics, the economy has to lead the country at any cost so all political parties must exhibit patience and take those moves which were in the favor of Pakistan and its economy.”

    Chairman BMG said that the worsening state of Pakistan’s economy was likely to terribly affect the exports as under the prevailing circumstances, foreign buyers will be reluctant to place any order keeping in view the overall political and economic instability which may delay export shipments.

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

    He quoted that today Pakistani rupee has depreciated to its lowest level in the history of Pakistan while the banks were neither retiring nor accepting any documents as they claim they don’t have any dollar to pay, which is creating a very disturbing scenario which might bring down the morale and confidence of the business community. “Business community is of the opinion that all this mess is created because of the political instability and the economy of Pakistan is not that bad as the exports of Pakistan marked an increase of 24 percent as compared to last year.

    He further said that criticism of political parties on each other and institutions of Pakistan also plays havoc with the confidence level of the business community and most importantly, it creates a trust deficit amongst the buyers of Pakistan goods abroad. “If all political parties do not understand, the scenario looks pessimistic and could deteriorate further hence, it is our appeal that economy must be segregated from political issues and things need to be brought back to normal in order to save the economy of Pakistan. Saving the economy of Pakistan would be like saving Pakistan”, he added.  

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

    He also appealed that political tussle and blame game by all political parties must be avoided as Pakistan’s deteriorating image in the international arena and the consequent depleting exports would be disastrous for the economy and put Pakistan’s survival at stake.

  • FBR urged to wave further tax on providing CNIC number

    FBR urged to wave further tax on providing CNIC number

    KARACHI: The Federal Board of Revenue (FBR) has been urged to wave further tax where CNIC (Computerized National Identity Card) number is provided by unregistered supplier.

    Karachi Chamber of Commerce and Industry (KCCI) in its proposals for budget 2022/2023 submitted to the FBR highlighted an issue stating an obvious anomaly is perpetuated by imposing 3 per cent penal tax (further tax) on registered persons on supplies made to unregistered persons.

    READ MORE: Tax exemption sought for plant, machinery import

    Despite providing CNIC number of unregistered buyers, as required under Section 8 (Sub-Sec.1, Clause M) of Sales Tax Act, 10th Schedule, the registered seller has still to pay 3 per cent further tax.

    Moreover, prior to Supplementary Finance Bill 2022, registered seller was not held responsible in case a fake CNIC was provided by buyer. However, after enactment of Supplementary Bill 2022, seller will be held accountable and face consequences in case fake CNIC number is provided by unregistered buyer.

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

    The outcome of the amendment is that it is unjust and irrational to impose 3 per cent further tax on supplies by registered person to unregistered persons, while also it is required to provide CNIC Number of unregistered buyer in Sales Tax Invoice.

    The KCCI proposed that CNIC number of unregistered buyers provided by registered seller/supplier be treated at par with STRN.

    The 3 per cent further tax on supplies to unregistered buyer should not be charged if CNIC number is provided by registered seller in Sales Tax Return.

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

    In case CNIC number of unregistered buyer of raw materials is not provided, VAT may be charged at 1.7 per cent on sales of raw material.

    Giving rationale to the suggestion, the KCCI said it will discourage cash economy and encourage documentation by placing the trust in registered persons.

    Placing the responsibility to broaden the tax base squarely on Regional Tax Offices (RTOs) and Large Tax Offices (LTOs) rather than on taxpayers.

    Further, it will discourage fake and flying invoices which are issued to avoid 3 per cent further tax.

    Besides, it will enhance business transactions through banking channels and promote growth.

    READ MORE: FBR suggested reduce corporate tax rate for listed companies

  • KCCI felicitates Shahbaz for becoming Prime Minister

    KCCI felicitates Shahbaz for becoming Prime Minister

    KARACHI: Karachi Chamber of Commerce and Industry (KCCI) on Monday felicitated Shahbaz Sharif for taking oath as 23rd Prime Minister of Pakistan.

    The leadership of Businessmen Group (BMG) and Office Bearers of the Karachi Chamber of Commerce & Industry, on behalf of the entire business and industrial community of Karachi, extended heartfelt congratulations to Shahbaz Sharif on taking oath as 23rd Prime Minister of the Islamic Republic of Pakistan.

    READ MORE: KCCI demands immediate withdrawal of policy rate hike

    In a joint statement issued, Chairman BMG Zubair Motiwala, Vice Chairman BMG Tahir Khaliq, Haroon Farooki, Anjum Nisar and Jawed Bilwani, General Secretary BMG AQ Khalil, President KCCI Muhammad Idrees, Senior Vice President Abdul Rehman Naqi and Vice President Qazi Zahid Hussain hoped that Prime Minister Shahbaz Sharif would now prioritize some of the urgent economic issues being faced by the country and pay special attention to the problems being suffered by the business & industrial community of Karachi since long. They also advised the Prime Minister to come up an effective mechanism which must ensure that every single decision or policy which directly or indirectly affects trade and industry, must devised in consultation with the business and industrial community.

    READ MORE: SBP intervention sought to stop further rupee devaluation

    They were of the opinion that the federal government has to pay attention towards some of the most pressing issues of Karachi particularly improving the infrastructure of Karachi and other serious issues like gas, electricity and water crises being faced by the business & industrial community of this city which continues to contribute a mammoth share of more than 65 percent revenue to the national exchequer, more than 95 percent to the provincial kitty and 54 percent in terms of exports despite all odds.

    In order to ensure sustainable economic prosperity, the federal government has to revisit all the policies so that the sense of deprivation felt by Karachiites and the city’s business community may be negated.

    READ MORE: Businessmen want early resolution of political uncertainty

    They stressed that PM Shahbaz Sharif must gather a team of economic experts, reliable and honest members of Business Community, who have absolute know-how of the issues on top priority from different sectors of the economy.

    The proposed team comprising of genuine representatives of business and industrial community would surely be able to prudently guide the government in formulating numerous policies directly or indirectly affecting the trade and industry.

    READ MORE: Direct flights between Pakistan, Tajikistan needed

    This step would certainly create a win-win situation and would be warmly welcomed by the entire business and industrial community of Pakistan as it was in the larger interest of the country, they added. BMG Leadership and KCCI Office Bearers extended full support and cooperation to Prime Minister Shahbaz Sharif and his team so that long lasting progress and prosperity for the entire country could be ensured.

  • KCCI demands immediate withdrawal of policy rate hike

    KCCI demands immediate withdrawal of policy rate hike

    KARACHI: Karachi Chamber of Commerce and Industry (KCCI) has urged the central bank to immediately withdraw the rise in the key policy rate of 2.5 per cent.

    Chairman Businessmen Group (BMG) Zubair Motiwala and President Karachi Chamber of Commerce & Industry (KCCI) Muhammad Idrees, while highly criticizing the State Bank’s move to exorbitantly raise the interest rate by 2.5 percent to 12.5 percent in an emergent meeting, urged Governor SBP to immediately revisit and withdraw this irrational increase as it would prove disastrous for the economy, exports and the industries.

    READ MORE: SBP increases policy rate sharply by 250bps to 12.25%

    In a joint statement issued, Chairman BMG and President KCCI stated that the entire business & industrial community was in a state of shock to see SBP’s anti-business, anti-economy and anti-exports move which has been taken particularly in a situation when the country’s economy was not so bad. State Bank’s autonomy doesn’t mean that it was free to take such a harsh step overnight which has never happened in 25 years’ history.

    It was highly unfair to abruptly and exorbitantly raise the interest rates without bothering to hold consultation with the stakeholders, they said, adding that the Karachi Chamber, from time to time, requested Governor State Bank to visit KCCI so that numerous monetary issues and central bank’s policies affecting businesses could be discussed in detail but, unfortunately, Governor SBP has no time to discuss some of the most pressing issues being suffered by the business community of Karachi.

    READ MORE: KATI terms sudden policy rate hike as economic disaster

    They noted that last month, Pakistan’s exports recorded an increase of 29.1 percent on Month-on-Month (MoM) basis as compared to last year which clearly indicates that the export sector was performing very well but now, the increase in interest rate would have a deep negative impact on the export performance. It will be completely disastrous for the industries and future investments as nobody would come forward to set up any industry due to exorbitant interest rate and the high cost of doing business which was going to bring the survival of businesses at stake, they cautioned.

    Chairman BMG and President KCCI said that the extortionate increase in the interest rate seems like an attempt to completely shut down the industrial and export activities. Is the State Bank intending to completely block the desperately needed foreign exchange being earned through exports and bring Pakistan’s economy at par with the Sri Lankan economy, they asked and advised the SBP to compare Pakistan’s excessive interest rate with the global interest rates which, we fear, would cool down the economic activities.

    READ MORE: SBP intervention sought to stop further rupee devaluation

    They said that the decision to increase the interest rate has been taken to contain inflation but keeping in view the ground realities and the overall high cost of doing business, the business and industrial community firmly believes that enhanced interest rate would prove counter-productive by further nurturing the inflation.

    Chairman BMG said, “As leader of the business community of Karachi, I fervently demand that the decision to raise the interest rate must be revisited which is purely not in the interest of the country hence it has to be taken back while the SBP must also hold consultations with the stakeholders prior to imposing such decision directly affecting the business and industrial activities.”

    President KCCI said that the increase in dollar value was due to political turmoil, not because of poor economic performance which has not yet been suffered by impact of rising oil prices hence, the State Bank must refrain from creating more problems for the economy.

    READ MORE: Businessmen want early resolution of political uncertainty

  • SBP intervention sought to stop further rupee devaluation

    SBP intervention sought to stop further rupee devaluation

    KARACHI: Karachi Chamber of Commerce and Industry (KCCI) Tuesday urged the central bank to immediate intervene in to stop further devaluation of Pakistan rupee (PKR).

    In a statement KCCI President Muhammad Idrees expressed deep concerns over continuous devaluation of rupee against dollar as the foreign currency hit a new all-time high by crossing Rs186.

    READ MORE: Dollar continues record spree against PKR; hits 185.23

    He urged the State Bank of Pakistan (SBP) to play its role and devise effective strategy to stop further devaluation rupees which was having a deep negative impact on the economy, particularly the inflation.

    “Although the experts are attributing the rupee devaluation to political uncertainty but the SBP, being the regulator, has to play a role otherwise, it will create a lot of problems for the economy which is sinking as it faces a lot of challenges due to widening current and fiscal deficits,” he said.

    READ MORE: Businessmen want early resolution of political uncertainty

    Muhammad Idrees said that rising dollar against rupee was raising the cost of doing business, making Pakistani goods uncompetitive in the export markets and unaffordable for common man at the local markets as the impact of rising dollar value is usually passed onto end-users.

    He said that it has to be understood that the share of exports in GDP stood at around 10 percent while the rest of 90 percent was local trade and imports hence the devaluation is hurting and has reached to a level where it has become unbearable.

    “Due to lack of effective price control mechanism, an abnormal upsurge has been witnessed in the prices of almost all the commodities of household usage which have to be controlled to ease the already overburdened and miserable life of the inflation stricken common man,” he stressed.

    READ MORE: Direct flights between Pakistan, Tajikistan needed

    “Severe devaluation of rupee has raised the cost of doing business and fostered the inflation, therefore, it is really crucial to review the current strategies being pursued by the regulator,” he reiterated.

    President KCCI feared that the economic crises including energy crises, devaluing rupee against dollar and rising trade deficit etc. would push the economy to a point of ‘no return’ and may even put Pakistan’s survival at stake. “All the efforts made to maintain GDP growth of 5 percent plus will go wasted if the ongoing political uncertainty continues for long period.”

    READ MORE: Withholding tax should be on income: FBR Chairman

    He stressed that the emerging situation has to be efficiently addressed and handled very carefully otherwise, the excessive devaluation will continue to increase the cost of doing business, which would terribly affect the industrial performance, raise unemployment and open the floodgates of inflation, particularly for the middle and lower segments of the society, besides making the already poor poorer due to unbearable inflation.

  • Businessmen want early resolution of political uncertainty

    Businessmen want early resolution of political uncertainty

    KARACHI: Business community is perturbed over political uncertainty after dissolution of national assembly following rejection of no-confidence motion against the prime minister.

    Chairman Businessmen Group (BMG) and Former President Karachi Chamber of Commerce & Industry (KCCI) M. Zubair Motiwala, while expressing deep concerns over the ongoing political crises that led to dissolution of National Assembly, stated that the entire business and industrial community was perturbed over the recent political developments as the economy was already in a fragile state due to devaluation of currency, descending reserves, rising commodity prices, widening current account and fiscal deficits therefore, these political crises must not be stretched for a longer period and resolved at the earliest with a view to save the economy from further woes.

    READ MORE: Direct flights between Pakistan, Tajikistan needed

    “The exports of Karachi city, which stood at 54 percent last year, have now descended to 50 percent as the lawmakers, who mostly remained busy in dealing with the opposition all the time, hardly had any time to look into and resolve the gas issue being suffered by the industries of Karachi that has caused 4 percent reduction in exports this year”, Zubair Motiwala said, adding that similar was the situation in case of other economic indicators which have also been drifting downward due to political uncertainty and the lack of attention.

    READ MORE: Withholding tax should be on income: FBR Chairman

    He said that the business community was gravely perturbed at this uncertain situation as the businesses are at a standstill, customers have disappeared from the markets and traders are facing serious liquidity crunch. 

    He stressed that people at the helm of the affairs must realize that the political issues were terribly hurting the economy so these have to be tackled prudently at the earliest otherwise, we fear that the already ailing economy would face more challenges and all the efforts made to somehow keep the economy afloat would go wasted.

    READ MORE: Karachi Chamber fears deep impact of PKR devaluation

    Chairman BMG said that the Karachi Chamber has always rightly demanded from the governments from time to time to introduce and strictly implement a ‘Charter of Economy’ duly agreed by all political parties of the country but unfortunately, this legitimate demand was never taken into consideration which was the reason for all the economic ills being faced by the country. “Consistency in the government policies and a clear roadmap to move forward which is devised through Charter of Economy, are the key factors leading to progress, prosperity and development which can only be achieved through Charter of Economy,” he added.

    READ MORE: POS retailers to get refunds automatically: Tariq Mustafa

    He said that the country was in a dire need of a Charter of Economy or road-map, developed in consultation with the business and industrial community and endorsed by all political parties. “We hope that the political crises are amicably resolved at the earliest and the Charter of Economy, which is the need of the hour, is also introduced and implemented in the larger interest of the country as any delay is going to prove very harmful for the economy.”

  • Direct flights between Pakistan, Tajikistan needed

    Direct flights between Pakistan, Tajikistan needed

    KARACHI: Pakistan and Tajikistan should start direct flights in order to reduce travel time. The issue was raised by the Ambassador of Tajikistan to Pakistan Ismatullo Nasredin and President Karachi Chamber of Commerce and Industry (KCCI) Muhammad Idrees at a meeting.

    (more…)
  • Withholding tax should be on income: FBR Chairman

    Withholding tax should be on income: FBR Chairman

    Karachi, March 14, 2022 – The Chairman of the Federal Board of Revenue (FBR), Dr. Muhammad Ashfaq Ahmed, emphasized the need for a shift in the approach to withholding tax (WHT), suggesting that it should be levied on income rather than transactions. He made these remarks during an address at the Karachi Chamber of Commerce and Industry (KCCI) on Monday.

    (more…)
  • Karachi Chamber fears deep impact of PKR devaluation

    Karachi Chamber fears deep impact of PKR devaluation

    KARACHI: Karachi Chamber of Commerce and Industry (KCCI) has expressed deep economic impact of massive devaluation of Pakistan Rupee (PKR) against the dollar.

    (more…)