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  • Karachi Chamber seeks fair tax treatment for commercial importers

    Karachi Chamber seeks fair tax treatment for commercial importers

    KARACHI: Karachi Chamber of Commerce and Industry (KCCI) has sought fair treatment on collection of withholding tax for commercial importers on import of industrial raw material.

    KCCI in its budget proposals submitted to the Federal Board of Revenue (FBR), said that under Section 148(1) of Income Tax Ordinance, 2001, 6 percent withholding income tax is levied on import of industrial raw materials, whereas manufacturers are exempt from such withholding tax at import stage under Section 159 read with Rule 72B (PART IV OF SECOND SCHDULE OF Income Tax Ordinance, 2001).

    The exemption has created disparity of 7 percent between commercial importers and manufacturers in total incidence of taxes (when 3 percent further tax are included).

    This anomaly has led to rampant misuse and evasion of taxes through over-import by manufacturers for trading purpose, fake registrations by commercial importers and corruption in tax offices for issuance of exemption certificates U/S 159 (1).

    The KCCI said that most of the commercial importers of Raw Materials have now registered as manufacturers to avoid high rate of WHT, 3 percent value addition tax and further tax of 3 percent.

    Nearly 90 percent of all industrial raw material is now imported under the category of manufacturers, while the industry also imports raw materials for trading.

    Loss of revenue is at over Rs.80 billion on total raw material import of Rs.3,250 billion in Pakistan.

    The KCCI proposed that the rate of withholding tax on import of raw materials should be equal for both commercial importers and manufacturers and fixed at 3percent on import stage.

    Further, exemption under Rule 72B (PART IV OF SECOND SCHDULE OF ITO) on raw materials imported by manufacturers should be withdrawn and disparity in WHT may be removed.

    The rate of withholding tax on commercial importers is very high and should be reduced to 1.5 percent to qualify as minimum tax as is the case for industry and large import houses.

    The chamber said that the measure will help broaden tax base, prevent misuse of exemption by fake registration as manufacturers.

    Besides, this will help in substantial Increase in revenue collection through rationalization.

    The KCCI said that the commercial importers of raw materials are a major support to SMEs and recover taxes on behalf of the government.

    Therefore, rationalization will revive the commercial import, support SMEs and prevent misuse of exemption.

  • KCCI proposes regularizing gold, jewellery sector

    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.

  • FBR recommended CNIC condition on sale of above 10 tola gold

    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.

  • FBR advised to withdraw powers of freezing bank accounts for tax recovery

    FBR advised to withdraw powers of freezing bank accounts for tax recovery

    KARACHI: Federal Board of Revenue (FBR) has been advised to withdraw powers of tax officials related to freezing bank accounts for tax recovery.

    Karachi Chamber of Commerce and Industry (KCCI) in its budget proposals for 2020/2021 submitted to the FBR highlighted provisions of Income Tax Ordinance, 2001 regarding accessing bank accounts for tax recovery.

    Under Section 140 of the Income Tax Ordinance, 2001 which deals with recovery of tax from persons holding money on behalf of a taxpayer.

    — (1) For the purpose of recovering any tax due by a taxpayer, the Commissioner may, by notice, in writing, require any person –

    (a) owing or who may owe money to the taxpayer; or

    (b) holding or who may hold money for, or on account of the taxpayer.

    This provision and further access to information on a bank accounts under other provisions of law, have been counterproductive and led to a flourishing cash economy, the KCCI said.

    It said that there were many innovative ways been evolved by businesses similar to the blockchain and local hundi system.

    Such provisions only affect the registered businesses while the entire unregistered sector is immune from such laws and a coercive approach.

    Banks are also suffering with decline in deposits and transactions which used to be conducted through the system. It is evident from a slowdown in economic activities, the chamber said.

    It is better to do way with such anti-growth and anti-business policies and laws. Powers to access the bank accounts of registered persons and to freeze account should be withdrawn through Finance Bill 2020.

    Access may only be limited to accounts of unregistered persons, but account may not be blocked or frozen.

    Commissioner should only be authorized to obtain information about the funds in accounts and should be authorized to seek clarification as to the nature of transactions and sources of funds. Such persons may be brought into the tax-net.

    The Karachi Chamber said that the proposed amendments would provide relief to the registered persons and restore confidence in banking system and would encourage official transactions.

    Besides, it would help in bringing unregistered persons into the tax-regime.

    Stimulate economic activities and growth. Increase bank deposits which may be used for lending to industry.

  • Regulatory duty must be rationalized to curb smuggling: Karachi Chamber

    Regulatory duty must be rationalized to curb smuggling: Karachi Chamber

    KARACHI: Karachi Chamber of Commerce and Industry (KCCI) has urged tax authorities to rationalize the regulatory duty on imported goods in order to curb smuggling.

    In its proposals for budget 2020/2021, the KCCI said that the regulatory duty was imposed in last fiscal year to rectify the balance of payment crisis.

    To some extent the regulatory duty on imported food items supported the food items produced locally but most of those items which are not produced locally due to climate and resources, have to be imported.

    High rates of RD on imported food items has sharply increased cost of import and consequently these items have been pushed into smuggling regime.

    “Rampant smuggling of these items is taking place with impunity making it impossible to import through documented channels.”

    The KCCI  Major loss of revenue to exchequer because smuggling mafia makes everything available without paying any taxes and duties.

    Imposition of regulatory duty is the main cause that such commonly used items like dry-fruits, nutrition, honey, grains, pulses and spices are being imported through illegal channels which is causing significant damage to the economy of the country.

    The KCCI suggested that regulatory duties should be rationalized and in some cases withdrawn to curtail smuggling and help to increase in revenues, documentation of trade and support the exports as many of the imported items are industrial raw materials which are re-exported to generate foreign exchange for Pakistan.

  • Auto parts, motorcycles should be excluded from retail price printing condition

    Auto parts, motorcycles should be excluded from retail price printing condition

    KARACHI: Federal Board of Revenue (FBR) has been urged to exclude auto spare parts and motorcycles from the requirement of printing of retail price.

    Karachi Chamber of Commerce and Industry (KCCI) in proposals for budget 2020/2021 submitted to the FBR, said that due to inclusion of motorcycle and automobile spare parts in the Third Schedule, to the Sales Tax Act, 1990 vide new serial No.49 in column (1) through the Finance Act, 2019, serious hardship is being faced by importers of motorcycle and automobile spare parts.

    Under the amended procedure, importers are required to print MRP (Maximum Retail Price) on the imported parts and pay sales tax and additional sales tax on customs value.

    The chamber said that importers were unable to determine the landed cost at the time of delivery of cargo at destination due to the fluctuations in exchange rates.

    “It is not possible to determine the sale price of imported auto parts at which the retailers will sell the same to end-users.”

    There is wide variation in sale prices by wholesalers and retailers. Importers cannot pre-determine and declare maximum retail price as required under the new regulations.

    Due to market fluctuations and rapidly changing demand and supply situation, importers cannot determine the final sale price and sales tax accordingly at import stage.

    Frequent and unpredictable fluctuation in exchange rates make it impracticable to forecast the actual landed cost and sale prices, the chamber said.

    The KCCI proposed that motorcycle and auto parts are not a consumer product /grocery item which may require MRP to be printed on the product. It is an industrial use product, supporting Pakistan’s auto industry and meeting the requirements of after-market.

    “Therefore the automobile/motorcycle spare parts may be taken out of Third Schedule and included in normal tax regime for assessment of Customs Duty, Sales Tax and WHT etc.

    Customs authorities have the competency to assess the values and levy the Custom Duty and Taxes accordingly.

    The KCCI said that the proposed amendment would facilitate importers and dealers in customs clearance and avoid detention and demurrage charges.

    Curtail rampant smuggling which has been on the rise after inclusion of Autoparts in Third Schedule.

    Further it would support automobile industry and after market. Prevent delays in clearance and resulting costs.

  • FBR suggested to abolish further sales tax on fulfilling CNIC condition

    FBR suggested to abolish further sales tax on fulfilling CNIC condition

    KARACHI: Federal Board of Revenue (FBR) has been proposed to abolish further sales tax in case taxpayers fulfil condition of Computerized National Identity Card (CNIC).

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  • KCCI wants end lockdown, deploy army for SOP enforcement

    KCCI wants end lockdown, deploy army for SOP enforcement

    KARACHI: Karachi Chamber of Commerce and Industry (KCCI) on Wednesday urged the government to lift lockdown completely and allow all type of businesses to restart their activities.

    Siraj Kassam Teli, Chairman Businessmen Group (BMG) and former KCCI president in a statement also advised the government to deploy troops from the army whose presence and patrolling at various commercial markets would ensure strict adherence to the Standard Operating Procedures (SOPs) devised to contain further spread of coronavirus pandemic.

    Teli said that Pakistan’s economy was already in deep crises and the country cannot afford further damages hence, it was really critical to restart all businesses with normal timings and get back to routine life in presence of the virus.

    “On one hand, we have to contain coronavirus pandemic but on the other, we also have to save the already ailing economy therefore, the patriotic and disciplined troops from armed forces must be given the task to ensure across the board implementation of SOPs, which has to be done on top priority in order to save the economy from plunging into further crises,” he said, adding that reopening of businesses under army’s supervision would help in protecting the businesses from complete collapse and save the masses from unemployment, poverty and starvation.

    Chairman BMG, while referring to numerous measures adopted by the Federal and Provincial governments since the imposition of lockdown from March 23, said that the federal government and all provincial governments strived really hard to deal with COVID-19 pandemic and they all deserve to be appreciated but unfortunately, the number of people affected by coronavirus continues to rise all over the country as the public and also the members of the business community have been largely ignoring the SOPs due to lack of discipline.

    “Pakistan army is well-known for its discipline all around the world hence, it is high time that the army must come forward to rescue the country, teach discipline to the masses and get the SOPs enforced all the time which is the only way to save our beloved motherland from further disaster,” he added.

    He stressed that the coronavirus pandemic is not going anywhere and we have to live with it and continue our businesses in a disciplined manner.

    “We cannot live in the lockdown forever so we have to exhibit the Discipline which is the first step on the road to success.”

    He cautioned that if the lockdown is not suspended immediately, many businesses, which remain completely suspended since last more than two months, would shut down forever that would lead to creating a chaotic situation as the people would find no other option but to come out on streets to protest due to rising unemployment and poverty.

  • Karachi Chamber demands lifting lockdown completely as corona cases rise above 40,000

    Karachi Chamber demands lifting lockdown completely as corona cases rise above 40,000

    KARACHI: Business community has demanded complete ease in lockdown on Sunday as cases of coronavirus have increased to over 40,000 in the country.

    The government has started easing lockdown since last Monday but the cases of coronavirus increase at faster pace. The corona cases have increased to 40,151 till May 17, 2020.

    Chairman Businessmen Group (BMG) & Former President Karachi Chamber of Commerce & Industry (KCCI) Siraj Kassam Teli in a statement urged the Sindh Government to completely do away with the ongoing lockdown at least during the last week of Ramadan ul Mubarak in which all the shops and shopping malls be permitted to operate 24-hours a day, which would not only help in dealing with the overcrowding issue at various commercial markets due to limited timings but would enable the small traders/ shopkeepers to recover some of the previous losses suffered by them because of the prolonged lockdown that began from March 23.

    Siraj Teli stressed that the lockdown has to be completely relaxed during the last six days from Monday to Saturday before Eid so that Karachiites could visit commercial markets without any hassle, haste or worries while the shopkeepers could also deal with their customers in an uncrowded atmosphere which was really needed to ensure social distancing, one of the key precautionary measure required to effectively contain further spread of coronavirus pandemic.

    “Subsequently, the lockdown can once again be fully re-imposed during Eid-ul-Fitr holidays and up to May 31 as announced by Sindh Government and from June 1, 2020 onwards, the Sindh government, after reviewing the overall situation, may follow the same formula in which small traders/ shopkeepers are allowed to operate for four days a week from Monday to Thursday and the lockdown remains active on Friday, Saturday and Sunday.

    While appreciating numerous steps taken by Sindh Government since the imposition of lockdown to prevent spread of coronavirus pandemic particularly the hard work by Chief Minister Syed Murad Ali Shah, Chairman BMG regretted that it was really unfortunate to see that during last week when the lockdown was eased, small traders and shopkeepers breached their commitments made to Sindh Government by grossly ignoring the mutually agreed Standard Operating Procedures (SOPs).

    “The Karachi Chamber, being the premier Chamber and actual representative of the entire business & Industrial community, is not only too concerned about the losses suffered by small traders, shopkeepers and the industrialists but also equally worried about the lives of the masses as we cannot afford to run our businesses at the cost of the lives of the innocent public, who could become victim of the life-threatening virus anytime, hence it is the moral and social responsibility of everyone to adopt the SOPs”, Siraj Teli said, while appealing the Small Traders and Shopkeepers from each and every commercial market across Karachi to strictly adhere to all the SOPs at any cost during the remaining days of the ongoing shopping season of Eid ul Fitr as any negligence towards these SOPs would create a disastrous situation, which was already too bad as the number of COVID-19 infected people continues to rise across the country.

    “Meanwhile, the citizens must also be very careful and take necessary precautionary measures so that we all could collectively battle against the life threatening coronavirus pandemic and save our beloved country from further disaster”, he added.

    Siraj Teli further commented, “Since day one, I have been reiterating that Coronavirus is not going to go anywhere and it is going to stay with us for the time being. It has become part of our lives and we will have to live with it. We cannot afford to keep the businesses closed forever so the government and the business community will have to jointly devise ways and means of how to safely get back to daily routine life in the presence of the virus.”

    He was of the opinion that all the SOPs were not just limited to the shopping season of Ramadan only but these must become part of our daily lives and routine business activities.

    He said, “The Sindh government has strived really hard during the last almost two months to contain the spread of coronavirus pandemic. We cannot put all these efforts at stake hence, the shopkeepers must strictly ensure social distancing and take precautionary measures within and outside their business premises which is not only in favor of their own lives and businesses but also in the larger interest of the country. Every single life is very important so we all have to maintain strict discipline and adopt the SOPs which would help us in continuing our businesses in the presence of the virus”.

  • Terminal operators refuse to extend waiver from detention, demurrage charges: KCCI

    Terminal operators refuse to extend waiver from detention, demurrage charges: KCCI

    KARACHI: Karachi Chamber of Commerce and Industry (KCCI) has said terminal operators have refuse to extend waiver from demurrage and detention charges despite clear instruction of the government to facilitate the trade in the wake of COVID-19.

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