KARACHI: President Karachi Chamber of Commerce & Industry (KCCI) Junaid Esmail Makda, while highlighting various Sales Tax and Income Tax anomalies unveiled in the Federal Budget 2019-2020, appealed Prime Minister Imran Khan, State Minister for Revenue Hammad Azhar and Chairman FBR Shabbar Zaidi to rectify all these anomalies on top priority prior to seeking approval of the Budget from the parliament.
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Any duty increase on beverages to result in industry closure: Siraj Teli
KARACHI: Siraj Kassem Teli, director of Pakistan Beverage Limited (Pepso Co. franchisee), while using platform of Karachi Chamber of Commerce and Industry (KCCI) raised voice against government’s proposed plan for implementing excise duty on beverage industry.
Teli, who is also chairman of Businessmen Group (BMG) and former President of KCCI, warned the government against hike in duty on beverage industry and said that any such action would lead not only to closure of the industry but also resulted in mass unemployment.
In a letter sent to Prime Minister Imran Khan, while referring to the ongoing buzz in the media and government circles about additional and new taxes including health tax and water surcharge being imposed in the next budget on beverage industry, he stated that this industry is already paying Rs100 billion to the national exchequer by way of output tax through FED and Sales Tax while the net revenue collection by the government comes to around Rs60 billion per annum which is apart from income tax, with-holding taxes, super tax and other provincial taxes.
He pointed out that over the years, beverage industry and its products have become a necessity of life as many Pakistanis do not have access to pure drinking water and this industry is providing them safe water and other beverages produced with state of the art machinery by strictly following global hygienic standards.
“We understand that the country is in dire need of additional revenue but one should realize that this new revenue must come from new sources and even if it is taken from old sources then it needs to be justified according to their capacity to pay otherwise it may jeopardize the existing revenue”, Siraj Teli stressed, adding that the Beverage Industry is already heavily taxed and if more burden is put on the industry, its growth, which is already in a declining mode in the first quarter, may suffer more.
He said that the cost of doing business has already gone up due to other import/ regulatory duties and upsurge in dollar rate etc. while as this industry produces consumer products, more burden will be passed on to the consumers.
Chairman BMG cautioned that there is a high chance that the imposition of new taxes may lead to closure of the industry resulting in jobs losses of hundreds of thousands of people across Pakistan, besides hampering Prime Minister’s efforts to bring more foreign investment to Pakistan because of such anti-business measures.
He elaborated that this is an industry where supply side of economics should follow where more revenue is generated with growth, wherein taxes are reduced along with consumer prices that would lead to quantum growth and appreciation in net revenue as well. Any proposal to increase taxes will reverse the growth and it would start declining, ultimately reducing the revenue already being achieved from the Beverage Industry and above all high taxes are incentive for evasion, he added.
Siraj Teli was of the opinion that today’s policy is actually shrinking the economy whereas the Government should have imposed a complete ban for one or two years on luxury items such as cars etc. and on those items which are being manufactured in Pakistan along with such food items without which we can survive.
“Also controlling inflation by increasing interest rates has a negative impact on new investment and industry. The solution lies in more industrialization only”, he added.
He said, “We at Pakistan Beverage Ltd. are in this business since the inception of Pakistan and are the highest tax payer in the Beverage and Food Industry for the last 40 years.
“We believe in a prosperous Pakistan, we believe in paying due taxes and we are there to help and support your initiatives.
“However, unjustified and excessive taxation will result in closure of the industry and put a significant dent in the existing revenue that is being collected by the government.
“This will also result in reduction of employment of hundreds of thousands of job across Pakistan in the industry along with the allied retail businesses.”
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KCCI expresses concerns over frequent rise in POL prices in Naya Pakistan
KARACHI: Karachi Chamber of Commerce and Industry (KCCI) has expressed concerns over frequent rise in petroleum prices in Naya Pakistan of present government and said that such hike in prices will make life difficult for common men and will substantially increase the cost of doing business.
President KCCI Junaid Esmail Makda in a statement on Saturday, while expressing sheer dismay over yet another hike in petroleum prices, devaluing rupee and unbearable inflation, rejected the increase in petroleum prices just ahead of upcoming Eid ul Fitr as a gift for the festival which would not only intensify the hardships for the masses but would also create a very difficult situation for the business and industrial community due to high cost of doing business.
He noted that after the upsurge in POL prices, HSD price has increased to Rs126.82 while petrol has touched the highest mark of Rs112.68, creating a very difficult situation for people from all walks of life in the ongoing era of inflation.
“Our Prime Minister talks a lot about cost and ease of doing business in Naya Pakistan, but how is it going to be possible when we have to frequently face hikes in prices of petroleum and other utilities, fluctuating exchange rates with higher duties on import and higher interest rates”, President KCCI asked.
Referring to the recent severe devaluation of Pakistan rupee against dollar, President KCCI said that the rupee was seen devaluating by approximately 23 percent against US Dollar from Rs123.60 to around Rs152.00, making it the worst performer when compared with 13 other currencies of Asia.
“Severe devaluation of rupee under IMF dictates along with State Bank’s strategy to keep on raising the key interest rate have resulted in raising the cost of doing business and the inflation, intensifying the hardships for the industry and the public therefore, it is really crucial to review the current strategies being pursued by the economic managers as these have proved counterproductive, detrimental for the economy and totally contrary to government’s claims towards the Ease of Doing Business”, he added.
He stressed that the emerging situation has to be efficiently addressed and handled very carefully otherwise, the rising petroleum prices and exorbitant 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 poor more poorer due to unbearable inflation.
Makda further elaborated that the rising dollar would lead to costlier imports and the exporters will also bear the brunt due to rise in cost of imported raw materials, pushing the economy into further deep crisis. Despite so many measures taken to discourage the imports including the imposition of Regulatory Duty on many items, Pakistan’s imports remain inelastic and a weaker rupee will not help. Mostly, they consist of raw materials, intermediate goods or machinery. Any devaluation would increase their cost thus making Pakistani exporters less competitive, he added.
He suggested that State Bank needs to ascertain the factors weakening the value of rupee and also check the possibilities of undue speculations and panic buying which, if done, would certainly help in stabilizing the rupee and restore the confidence of the business community.
Referring to SBP’s Monetary Policy Statement in which benchmark interest rate was raised to 12.25 per cent, President KCCI stated, “The State Bank has to realize that tighter monetary policy stance never yielded positive results therefore, it is high time that the central bank must soften its stance in order to ensure relief to the businessmen and industrialists who are playing a major role in Pakistan’s economic progress and prosperity by continuing their businesses in extremely dire circumstances,” he added.
President KCCI further noted that the Asian Development Bank has forecasted Pakistan’s economic growth at 3.9 percent for FY19 and 3.6 percent in FY20 while the World Bank has predicted growth rate of 3.4 percent in FY19 and a further decrease to 2.7 percent in FY20.
Moreover, the lowest projected growth for FY19 comes from the IMF at 2.9 percent which the international lender expects to drop to 2.8 percent in FY20.
All these poor forecasts by these international organizations paint a bad picture for potential investors as they get scared away which was really worrisome, he opined.
He hoped that the federal government would realize the gravity of the situation and accordingly take steps to stop further devaluation of rupee against dollar while the State Bank’s benchmark interest rate will also be brought down to single digit to spur economic growth and industrialization in the country.
A favorable reduction in discount rate would bring down the cost of doing business, attract fresh investment and promote expansion & industrialization, besides creating job opportunities and enhancing exports of the country, he added.
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KCCI praises Imran Khan for providing relief to tax evaders through amnesty scheme
KARACHI: Karachi Chamber of Commerce and Industry (KCCI) has praised Prime Minister Imran Khan for giving opportunity to tax evaders to document their black money at very low tax rates.
KCCI President Junaid Esmail Makda stressed that in order to make the amnesty scheme successful, the government will have to ensure complete secrecy and confidentiality of the declarants’ data at any cost otherwise, they will not be able to achieve the desired results.
He said that this amnesty scheme must not end up like the last one in which the highly classified data of those individuals who availed the previous amnesty scheme was shared with several government agencies including Federal Investigation Agency (FIA) and National Accountability Bureau (NAB) against the commitment to keep declarants’ info confidential.
Referring to government’s assurance to keep this scheme easy to understand, he hoped that the amnesty scheme has been devised in such a manner that number of queries are kept minimal as it is a well-known fact that individuals will be reluctant to respond to excessive queries seeking details about the source of income and other such questions because of fears of getting into any kind of trouble in future.
“The business community will be more than happy to become part of the documented economy but the government has to support them by protecting them from any kind of harassment from agencies/ institutions”, he added.
He further stated that although the government has provided the opportunity to become part of the scheme until June 30 but this scheme must be extended for a longer period.
After seeing the failure of previous amnesty scheme in which harassment by serving notices was widely witnessed, many individuals will be reluctant to declare their assets hence, the government must extend it and also has to take confidence building measures in due course to regain the trust of the masses.
“After seeing some success stories of those individuals who avail this year’s amnesty scheme, I am sure many others will also come forward to benefit from the amnesty scheme so it must be made available for a longer period to tap such individuals”, he added.
He was fairly optimistic that the scheme will help the government in bringing undocumented persons, assets and income into the documented sector. The scheme has the potential to bring in macroeconomic and fiscal stability in the economy.
President KCCI further stated that this scheme offers a lucrative opportunity to pay just 4 percent for legalizing Benami Assets within the country and 6 percent for assets outside the country while 3 percent tax for undeclared sales which was a good offer for whitening the black money.
While complimenting Chairman FBR Shabbar Zaidi for taking pro-business steps, Junaid Makda hoped that he would continue to do so throughout his tenure which would help in restoring the confidence of business community to a great extent and that in turn would lead to economic prosperity for the entire country.
He advised Chairman FBR to formulate practical policies to increase the tax net and catch tax evaders in order to strengthen the country’s economy.
The loyal taxpayers are being overburdened every year to achieve the revenue targets whereas those outside the tax net continue to enjoy all the luxuries of life without contributing a single rupee to the national exchequer, he opined, adding that FBR has been claiming of having details of all such tax evaders since many years but unfortunately no action has been taken so far to strictly deal with them.
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Karachi Chamber welcomes restricting FBR officers for freezing taxpayers’ bank accounts
KARACHI: Karachi Chamber of Commerce and Industry (KCCI) has warmly welcomed the first order issued by the newly appointed Chairman Federal Board of Revenue (FBR) Shabbar Zaidi immediately after assuming charge in which all the Commissioners Inland Revenue have been barred from freezing bank accounts which was being demanded by KCCI since long.
President KCCI Junaid Makda termed the order as ‘pro-business move’ and the first step in the right direction which would not only help in restoring the lost confidence of the business & industrial community but would also prove to be favorable for the economy as after seeing such pro-business initiatives, many individuals would prefer to come into the tax net, which would result in documenting the economy and improving the country’s lowest tax-to-GDP ratio.
In a statement issued, Junaid Makda pointed out that by virtue of this order, it would be mandatory for all Commissioners of Inland Revenue to obtain permission from Chairman FBR prior to freezing any bank account while at least 24 hour prior notice will also be served to the owner of the bank account which the business and industrial community highly appreciates.
He said that the Karachi Chamber had struggled a lot and has been vocally raising voice against massive discretionary powers which have been bestowed to FBR officers even at lower level, intensifying the hardships for the loyal taxpayers.
“As the first step in the right direction has been taken, we, the business and industrial community of Karachi, expect more such moves in near future. We firmly believe that massive discretionary powers have to be curtailed which is the only way forward to improve revenue collection, ensure economic prosperity and make FBR a taxpayers’ friendly institution”, he added.
While extending felicitation to Shabbar Zaidi, President KCCI advised Chairman FBR to remain steadfast and keep on taking such bold steps which are in the larger interest of the country and the business community.
Junaid Makda also extended Karachi Chamber’s full support and cooperation to Chairman FBR for all his future endeavors towards improving the existing taxation system of the country which is in really bad shape.
He hoped that the newly appointed Chairman FBR would also review and take KCCI’s Budget Proposals into consideration which have been compiled after taking inputs from all the stakeholders.
“KCCI’s Budget Proposals have been delineated after intense brainstorming as we wanted to ensure that all our recommendations for Federal Budget 2019-20 are devised in such a manner that they prove to be favorable for the economy and ensure an enabling business environment for the entire business & industrial community of Pakistan”, he added.
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FBR asked not to send notices for turnover tax
KARACHI: Karachi Chamber of Commerce and Industry (KCCI) has urged Federal Board of Revenue (FBR) to issue necessary instructions to all RTOs to refrain from sending notices for demanding the unjust annual turnover Tax to members of Pakistan Yarn Merchants Association (PYMA) till the issue is resolved as the Annual Turnover Tax, which was 0.1 percent, was inadvertently being charged at 1.0 percent.
In a letter sent to Member (Inland Revenue-Policy) FBR, Dr. Hamid Ateeq Sarwar on Wednesday, President KCCI Junaid Esmail Makda referred to a meeting between KCCI delegation and FBR authorities held recently at FBR House in Islamabad in which this particular issue was also thoroughly discussed with Member IR-Policy and other officials who assured to resolve the same in due course but no correction has been done so far in SRO333 (1)/2011.
While reiterating that Inland Revenue-Policy department and RTOs should not issue further notices, he said that PYMA members have been receiving notices for Annual Turnover Tax which have to be suspended till the FBR makes necessary amendment.
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KCCI hopes new finance adviser to take steps minimizing taxpayers’ grievances
KARACHI: Karachi Chamber of Commerce and Industry (KCCI) on Monday felicitated Dr. Hafeez Shaikh on his appointment as adviser to prime minister on finance, revenue and economic affairs.
The KCCI hoped that the new adviser would take practical steps in minimizing grievances of genuine taxpayers.
Chairman Businessmen Group & Former President KCCI Siraj Kassam Teli and President KCCI Junaid Esmail Makda, while extending heartfelt felicitations to Dr. Abdul Hafeez Sheikh on his appointment as Adviser to Prime Minister on Finance, said that keeping in view his vast experience and past performance, Dr. Hafeez Sheikh will certainly succeed in overcoming numerous crises being suffered by the country.
In a letter sent to PM’s Adviser, Siraj Teli and Junaid Makda warmly welcomed the appointment of Dr. Hafeez Sheikh as PM’s Adviser and said that that due to his expertise and well acquaintance with trade and economic issues, the business and industrial community of Karachi was fairly optimistic that Dr. Sheikh will be able to successfully devise effective strategies in order to completely get rid of all types of crises.
They stressed that as country was currently going through severe economic crises, therefore it was really essential that the business and industrial community should be taken on board in the policy making process.
They hoped that the newly appointed PM’s Adviser would also take practical steps to minimize the grievances being faced by loyal taxpayers who are suffering terribly due to serious loopholes in the existing taxation mechanism.
They stressed that the consultation strategy adopted by the PTI government with the business community of Karachi must continue and the contribution of more than 70 percent revenue to the national exchequer must always be taken into consideration.
“The business and industrial community of Karachi stands shoulder-to-shoulder with the government during this difficult time and we will continue to support the government in the larger interest of the country,” they added.
They also invited Dr. Hafeez Sheikh to visit the Karachi Chamber as soon as possible so that the business and industrial community could get an opportunity to share views about the Amnesty Scheme and also give valuable proposals for the forthcoming Federal Budget 2019-20, besides suggesting ways and means of how to improve the taxation system, enhance revenue generation and ensure ease of doing business which is one of the top most priority of the present government.
Siraj Teli and Junaid Makda also paid glowing tribute to Former Finance Minister Asad Umer for always realizing the ground realities, making necessary corrections and struggling really hard to somehow minimize the burden on the poor segment of society.
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Freezing bank account, raid only on discovery of evasion: KCCI
KARACHI: Karachi Chamber of Commerce and Industry (KCCI) has recommended that harsh measures of freezing bank account and raid should only be undertaken on discovery of massive tax evasion.
A delegation of KCCI held discussions on Budget Proposals for Federal Budget 2019-2020 with Chairman Federal Board of Revenue (FBR) Jehanzaib Khan and his team at a meeting held at FBR House in Islamabad on Thursday.
The KCCI team suggested that such harsh actions will only be taken in case of when evasion of very large amount is detected and only when concrete evidence is available rather than carrying out random raids on business entities.
KCCI’s delegation, which was led by Chairman Businessmen Group & Former President KCCI Siraj Kassam Teli, comprised of Vice Chairmen BMG Haroon Farooki and Anjum Nisar, General Secretary BMG AQ Khalil, President KCCI Junaid Esmail Makda and Former Senior Vice President Muhammad Ibrahim Kasumbi while Dr. Hamid Ateeq Sarwar Member (Inland Revenue Policy), Muhammad Javed Ghani Member (Customs Policy) and Chief of Income Tax, Chief of Sales Tax and Chief of Excise Duty and others were also present at the meeting.
During the meeting, consensus was developed on various major issues and the FBR officials, while agreeing to most of KCCI’s budget proposals, assured to implement the same in the upcoming budget.
The FBR Officials, while responding to KCCI’s proposal, agreed to rationalize the tax structure for import of raw materials by commercial importers and manufacturers.
They also committed to review and curtail the discretionary powers vested to the officials of Inland Revenue which are a source of harassment and extortion of business and industrial community.
KCCI delegation highlighted all major issues including issues pertaining to the Income Tax, Sales Tax and discretionary powers along with concessions & exemptions in various sectors of the economy which have resulted in the distortion of the tax regime.
In his remarks, Chairman BMG & Former President KCCI Siraj Kassam Teli pointed out that the current tax regime, relevant laws and discretionary powers were being used to harass the business and industrial community and were hindering economic and industrial growth.
“These laws have to be reformed in order to create a conducive environment for growth and liberalization of trade and also for the revival of economic activities”, he added.
On the occasion, a comprehensive presentation was also given to the FBR team in which major taxation issues were highlighted and remedial steps were also given for ease of doing business and enhanced revenue generation.
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Commerce Ministry Help Sought as South Africa Imposes Anti-Dumping Duty on Pakistani Cement
KARACHI: Chairman Pakistan-South Africa Business Forum (PSABF) Mohammad Rafiq Memon has said that Pakistan’s cement exports to South Africa have suffered terribly during the last couple of years because of the anti-dumping duty imposed by the South African government that resulted in shrinking cement export to around US$100 to US$150 million which was around US$700 million prior to imposition of anti-dumping duty.
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IMF assistance only option for economy: Shaikh Rasheed
KARACHI: Sheikh Rasheed Ahmed, Federal Minister for Railways on Saturday said the economy is facing immense difficulties.
“We are stuck in a lot of crises and it is a well-known fact that IMF conditions will be really stiff. I, as Minister, have been reiterating this since day one that we have no other option but to approach the IMF for assistance,” he said while addressing business community at Karachi Chamber of Commerce and Industry (KCCI).
He also said that there will be no economic stability without the political stability.
Highlighting the improved performance of Pakistan Railways (PR), the Minister said that PR has earned Rs4 billion more as compared to the earnings during the same period of previous year. “We have also provided three more container trains to the business community and the number of freight trains during Imran Khan’s has enhanced from just 8 to 14,” he added.
He said that a total of 24 new trains have been initiated so far in which five categories have been defined for different types of passengers while the occupancy of Rehman Baba Train has reached 160 percent with improved earnings.
“We have also initiated Jinnah Express and Green Line which will be followed by Sir Syed Express with a target to attract all five types of customers and our overall strategies have been very successful.”
Referring to 1760km long ML-1 project from Karachi to Peshawar, the Minister said that in this regard, Prime Minister Imran Khan will be signing the agreement on 27th April 2019 which would result in laying of completely new double track from Karachi to Peshawar with fencing on both sides and a minimum speed of 160Kms. Work on this project will be completed in the next five years, he added.
Commenting on Karachi Circular Railway Project, the Minister committed that as soon as the Sindh government signs agreement, approves the design and feasibility, Pakistan Railway will remove all encroachments, of which many of the commercial encroachments have already been removed, and hand over the track to Sindh government but the Sindh government has to work in this regard.
“If KCR is not completed during our tenure, it will never be completed”, he opined, adding that it was a really essential project which has become part of CPEC now and the Gwadar port which is capable of docking 190 ships each day.
Responding to a suggestion, he invited the business community to undertake joint venture for setting up setting up the proposed parking plaza on PR land at II Chundrigar Road but Pakistan Railways must continue to get its share regardless of whether the parking plaza becomes successful or not.
Speaking on the occasion, Chairman Businessmen Group & Former President KCCI Siraj Kassam Teli, while referring to Imran Khan’s last year’s visit on July 22 to Karachi to meet the business community just a couple of days before the general election, requested the Sheikh Rasheed to ask PM Imran Khan to honor all his commitments including his commitment to visit KCCI.
He said, “during the said meeting, we suggested to remove all those individuals who are involved in wrongdoings and corruption. We cautioned that the corrupt bureaucracy will not allow Imran Khan to take remedial measures but these elements have to be pinpointed and sidelined while the honest officers must be brought forward at the helm of the affairs.”
“However, except a few nominal changes done recently, no major change was witnessed in the FBR, NAB and FIA and the same old corrupt elements were given freehand, allowed to continue their wrongdoings and asked to make corrections”, he added.
Referring to a letter sent to Prime Minister Imran Khan, Siraj Teli said that the Private Sector’s representatives, who work on the Boards of Public Sector Companies such as Karachi Port Trust (KPT), Pakistan International Airlines (PIA) and Civil Aviation Authority (CAA) etc., take/ endorse decisions purely on the basis of whatever information is provided to them at the Board Meeting of any particular Public Sector company and that information may not be correct or may be incomplete.
“However, after a number of years when FIA or NAB find anything wrong in these public sector companies, they immediately start pursuing private sector representatives who have got nothing to do with day-to-day activities of the public sector companies yet they are accused and undergo extensive investigation and frequent summoning by NAB or FIA”, he added.
He asked Sheikh Rasheed to request the Prime Minister to look into this matter and give immunity to representatives of private sector from such investigations. They should not even be contacted until and unless there is a solid proof of their direct involvement or they being beneficiaries. The Karachi Chamber will never support anyone who is found guilty of any misconduct”, he said, adding that the business community was really worried and fed up due to constant harassment by NAB, FIA and FBR which is not acceptable to at all.
Commenting on the forthcoming Amnesty Scheme, Siraj Teli said that the previous amnesty was better but this amnesty scheme would become a failure due to lack of trust as those individuals who declared their assets in the previous amnesty scheme, were constantly being pursued and harassed by FBR, FIA and NAB. “Amnesty without protection and without dealing with the trust deficit would lead to failure”, he added.
President KCCI Junaid Esmail Makda, in his welcome address, stated that Karachi was one of the world’s most populous city and one of the mega cities. Lamentably, it may be the only city of this size that doesn’t have a mass transit transport system now when surprisingly, it did have Karachi Circular Railway (KCR) in the past.
He said that Karachi produces about 30 percent of the manufactured good, handles 95 percent of foreign trade and contributes more than 70 percent to the national revenue yet it remains deprived of basic facilities including KCR.