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  • FBR, SBP to make procedure for tax payment on export of services

    FBR, SBP to make procedure for tax payment on export of services

    ISLAMABAD: The government has imposed income tax on export of services and in this regard Federal Board of Revenue (FBR) and State Bank of Pakistan (SBP) will make procedure for payment of tax.

    According to budget 2021/2022 documents, the Finance Bill 2021 proposed a new section 154A for imposition of income tax on export of services.

    The proposed new section is as follow:

    “154A. Export of Services.– (1) Every authorized dealer in foreign exchange shall, at the time of realization of foreign exchange proceeds on account of the following, deduct tax from the proceeds at the rates specified in Division IVA of Part III of the First Schedule –

    (a) exports of computer software or IT services or IT enabled services in case tax credit under section 65F is not available;

    (b) services or technical services rendered outside Pakistan or exported from Pakistan;

    (c) royalty, commission or fees derived by a resident company from a foreign enterprise in consideration for the use outside Pakistan of any patent, invention, model, design, secret process or formula or similar property right, or information concerning industrial, commercial or scientific knowledge, experience or skill made available or provided to such enterprise;

    (d) construction contracts executed outside Pakistan; and

    (e) other services rendered outside Pakistan as notified by the Board from time to time;

    (2) The tax deductible under this section shall be a final tax on the income arising from the transactions referred to in this section, upon fulfilment of the following conditions –

    (a) return has been filed;

    (b) withholding tax statements for the relevant tax year have been filed; and

    (c) sales tax returns under Federal or Provincial laws have been filed, if required under the law;

    (d) no credit for foreign taxes paid shall be allowed.

    (3) The provisions of sub-section (2) shall not apply to a person who does not fulfill the specified conditions or who opts not to be subject to final taxation:

    Provided that the option shall be exercised every year at the time of filing of return under section 114.

    (4) Where a taxpayer, while explaining the nature and source of any amount, investment, money, valuable article, expenditure, referred to in section 111, takes into account any source of income which is subject to final tax in accordance with the provisions of this section, he shall not be entitled to take credit of a sum that can be reasonably attributed to the business activity or activities mentioned in sub-section (1).

    (5) The Board in consultation with State Bank of Pakistan shall prescribe mode, manner and procedure of payment of tax under this section.

    (6) The Board shall have power to include or exclude certain services for applicability of provisions of this section.”

  • SBP issues Rs70 coin to commemorate Pak-China relationship

    SBP issues Rs70 coin to commemorate Pak-China relationship

    KARACHI: State Bank of Pakistan (SBP) on Thursday issued Rs70 coin to commemorate the diplomatic relationship between Pakistan and China that were established on May 21, 1951.

    To mark the occasion of 70th anniversary of Pakistan-China Diplomatic relations, the government of Pakistan decided to issue a commemorative coin of Rs.70.

    The SBP launched the commemorative coin in an event held in Islamabad. Foreign Minister Makhdoom Shah Mahmood Qureshi was the as chief guest of the event. It was also attended by NongRong, Ambassador of China as the Guest of Honor.

    In his welcome address, the Governor State Bank of Pakistan (SBP) Dr. Reza Baqir thanked both the foreign Minister Makhdom Shah Mahmood Qureshi and the Ambassador of China NongRong for their participation in the event.

    He said that it is an honor for State Bank to be part of the tribute being paid by the Government of Pakistan by issuing this commemorative coin to celebrate the diplomatic relationship of the two countries.

    He added that both China and Pakistan are cooperating with each other on various fronts for the common good of people of the brotherly countries. He recalled that SBP had issued commemorative coins on founding anniversary of People’s Republic of China, establishment of diplomatic relations between the two countries and on the occasion to mark Pakistan-China Year of Friendship.

    Foreign Minister Shah Mahmood Qureshi in his address termed the friendship between Pakistan and China a role model for the rest of the world.

    He said that with strong diplomatic ties both the countries have endureddecades of relationship collectively and stood with each other in the wake of every tribulation. He thanked the visionary leadership of China under President Xi Jinping for conceiving and heavily investing in China Pakistan Economic Corridor (CPEC). He said relations with China has been the cornerstone of Pakistan’s foreign policy.

    Ambassador of China to Pakistan, NongRong, in his address said that both the government and people of China love their Pakistani brethren and desire to see the country making progress in every sphere of life. He said both China and Pakistan share same views on all-important international issues.

    It may be mentioned that it is the fourth coin of its kind on the subject of Pak-China relations. The first coin of Rs.10 denomination was issued in October 2009, celebrating the auspicious occasion of 60th Anniversary of founding of Peoples Republic of China. The second coin of Rs.20 was issued in May 2011 to celebrate 60th Anniversary of establishment of diplomatic relations between Pakistan and China as Year of Pak-China Friendship – 2011. The third coin was issued in 2015 to mark “Pakistan-China Year of Friendly Exchange 2015.

  • Remittances remain above $2 billion for 12th straight month

    Remittances remain above $2 billion for 12th straight month

    KARACHI: The inflow of workers’ remittances continued their exceptional streak in May 2021, remaining above $2 billion for a record 12th straight month, State Bank of Pakistan (SBP) said on Thursday.

    Remittances received during May 2021 amounted to US $ 2.5 billion, 33.5 percent higher than the same month last year. These were also higher than the monthly average of US $ 2.4 billion during July-April FY21.

    On a month-on-month basis, workers’ remittances fell by 10.4 percent in May 2021 compared to April 2021. This fall was expected as remittances usually slow in the post Eid-ul-Fitr period. As Eid fell in mid-May 2021 with markets closed a week earlier, there was some front-loading of remittances in April 2021. However, the seasonal decline in May 2021 was less the half the average decline observed during FY2016-2019. In FY2020, remittances experienced an exceptional rise due to the easing of Covid lockdowns in the post-Eid period in Gulf countries.

    On a cumulative basis, remittances surged to US $ 26.7 billion during July – May FY21, higher by 29.4 percent over the same period last year. Remittances during the first eleven months of FY21 have already crossed the full FY20 level by $3.6 billion.

    Remittance inflows during July-May FY21 were mainly sourced from Saudi Arabia ($7.0 billion), United Arab Emirates ($5.6 billion), United Kingdom ($3.7 billion) and the United States ($2.5 billion).

    Record high inflows of workers’ remittances during FY21 have been driven by proactive policy measures by the Government and SBP to incentivize the use of formal channels, curtailed cross-border travel in the face of COVID-19, altruistic transfers to Pakistan amid the pandemic, and orderly foreign exchange market conditions.

  • SBP allows mentally disordered persons to open bank account

    SBP allows mentally disordered persons to open bank account

    KARACHI: State Bank of Pakistan (SBP) has allowed mentally disordered persons to open bank account through a well-defined account opening process, a statement said on Tuesday.

    The process has been devised after thorough consultation with stakeholders. Now, for the first time in Pakistan, mentally disordered persons will be able to open a bank account under a new category of customers account namely “mentally disordered person account” introduced by SBP in its AML/CFT/CPF regulations.

    State Bank has advised all banks to facilitate the mentally disordered persons by allowing them to open and maintain a bank account with the help of a court appointed manager as per the applicable laws related to mental health.

    Account opening process will include presentation of valid identity documents and biometric verification through NADRA of mentally disordered person and court appointed manager.

    Moreover, bank will verify certified true copy of court order to ensure authenticity of the appointed manager. All CDD requirements should be completed for both persons to meet AML/CFT/CPF Regulations.    

    It may be recalled that SBP has earlier taken several measures and initiatives in consultation with banking industry for Persons with Disabilities like giving special consideration for their employment and improvement in accessibility infrastructure such as ramps and wheelchair facilities in their branches.

    SBP has also made available subsidized financial facilities and credit guarantee schemes for differently abled persons.  All these measures are being undertaken under a broader objective of improving financial inclusion in the country.

    SBP’s current step along-with a new comprehensive financial inclusion policy for Persons with Disabilities to be unveiled shortly by SBP will pave the way for universal financial inclusion including those of marginalized segments.

  • Country’s foreign exchange reserves increase by $278mn to $23.294bn

    Country’s foreign exchange reserves increase by $278mn to $23.294bn

    The State Bank of Pakistan (SBP) announced on Thursday that the country’s liquid foreign exchange reserves witnessed a significant boost, soaring by $278 million to reach $23.294 billion by the week ending May 28, 2021.

    (more…)
  • SBP amends regulations to promote real estate sector

    SBP amends regulations to promote real estate sector

    Karachi: In order to provide further support to the development of real estate sector, State Bank of Pakistan (SBP) has amended its capital adequacy regulations by significantly lowering the applicable risk weight (from 200% to 100%) on banks/ DFIs’ investments in the units of Real Estate Investment Trusts (REITs).

    REITs are companies that raise funding from general public and institutions and deploy these
    funds through investment in real estate properties.


    With the aforesaid changes in capital adequacy regulations, banks/DFIs will now be able to increase their investments in REITs without the need to allocate relatively large amount of capital.

    This will, in turn help banks to promote development of real estate sector in the country.

    The enhanced participation of financial institutions, backed by regulatory initiatives, would also encourage REIT Management Companies to launch new REITs, providing further boost to the Government’s agenda
    for development of housing and construction sectors.


    It may not be out of place to mention that SBP has been taking a number of regulatory steps to
    enhance banks/DFIs’ participation in such sectors through their financing and investment activities, In line with Government of Pakistan’s various initiatives for the development of housing and construction sector.

    Earlier, SBP amended certain provisions of its existing Prudential Regulations for
    Corporate & Commercial Banking to encourage enhanced participation and investment of banks/DFIs in the REITs that enabled banks/DFIs to make higher investments in REITs to the tune of 15% of their equity as against the previous limit of 10%.

    Moreover, SBP has allowed the banks to count their investments in shares/units/bonds/TFCs/Sukuks issued by REIT Management Companies towards
    achievement of their mandatory targets for housing and construction finance.

    The amendments in SBP’s capital adequacy regulations will further incentivize banks to contribute towards a well-functioning capital market for real estate sector.

  • Key policy rate kept unchanged at 7pc on improved GDP growth forecast

    Key policy rate kept unchanged at 7pc on improved GDP growth forecast

    KARACHI: The Monetary Policy Committee (MPC) on Friday decided to keep the key policy rate unchanged at 7 percent owing to improved GDP growth forecast to 3.94 percent and hope of further higher growth in the next fiscal year.

    A statement issued by the State Bank of Pakistan (SBP) said that since its last meeting in March, the MPC was encouraged by the further upward revision in the FY21 growth forecast to 3.94 percent.

    The MPC noted that this confirms the strength of the broad-based economic rebound underway since the start of the fiscal year, on the back of targeted fiscal measures and aggressive monetary stimulus.

    This positive momentum is expected to persist, translating into higher growth next year.

    According to the SBP statement, the inflation rose to 11.1 percent (y/y) in April, propped up by the lingering impact of this February’s electricity tariff increase as well asa pick-up in month-on-month food prices, partly driven by the usual seasonality around Ramzan. The MPC noted that supply-shocks to food and energy still dominate, with a small number of energy and food items in the CPI basket accounting for about three-fourths of the rise in inflation since January.

    The MPC also observed that although core inflation in urban areas has risen by around 1.5 percentage points during this period, available evidence suggests that demand-side pressures on inflation continue to be relatively contained.

    This reflects the fact that despite the economic recovery, there is still some spare capacity following last year’s contraction. Second-round effects from the supply shocks are also not visibly apparent: price pressures are concentrated in a few items, wage growth is subdued keeping a cap on costs, and inflation expectations remain reasonably anchored. As previously forecast, the headline year-on-year inflation rate is likely to remain elevated in the coming months due to the recent electricity tariff hike, pushing the average for FY21 close to the upper end of the announced range of 7-9 percent. As supply shocks dissipate thereafter, inflation is expected to gradually fall toward the 5-7 percent target range over the medium-term.

    In light of the foregoing considerations, the MPC was of the view that the current significantly accommodative stance of monetary policy remains appropriate to ensure the recovery becomes firmly entrenched and self-sustaining. This is especially so given the renewed heightened uncertainty created by the on-going third wave of Covid in Pakistan and the fiscal consolidation expected this fiscal year. As a result, the MPC noted that it was important for monetary policy to remain supportive. The MPC observed that given the Covid-related uncertainties, the cost of withdrawing monetary stimulus too soon exceeded that of withdrawing too late.

    Looking ahead, in the absence of unforeseen circumstances, the MPC expects monetary policy to remain accommodative in the near term, and any adjustments in the policy rate to be measured and gradual to achieve mildly positive real interest rates over time. If demand side pressures emerge as the recovery becomes more durable and the economy returns to full capacity, the MPC noted that it would be prudent for monetary policy to begin to normalize through a gradual reduction in the degree of accommodation. This would help ensure that inflation does not become entrenched at a high level and financial conditions remain orderly, thereby supporting sustainable growth.

    In reaching its decision, the MPC considered key trends and prospects in the real, external and fiscal sectors, and the resulting outlook for monetary conditions and inflation.

  • SBP grants commercial license to PayFast

    SBP grants commercial license to PayFast

    KARACHI: PayFast, the indigenous payments solution by APPS, has become first payment gateway to receive a commercial license from the State Bank of Pakistan (SBP), a statement said on Tuesday.

    It said that the payment system enables merchants, billers and aggregators to receive payments from their customers through a variety of methods such as bank accounts, wallets and domestic and international payment schemes. The gateway operates with state of the art security, thereby mitigating risk for its customers through PCI-DSS certification anda data-driven fraud monitoring system.

    PayFast addresses merchant pain points while accepting orders online, which has seen a striking escalation since the covid-19 pandemic.

    The number of e-commerce merchants registered with banks has increased from 1,400 to almost 2,500 in a year, contributing to Pakistan’s exponential growth in e-commerce, which is all set to cross $3 billion by the end of 2021.

    This growth can also be attributed to increasing connectivity and internet access, allowing businesses to thrive online.

    The number of3G/4G subscribers have jumped to 100 million. PayFast, therefore, enhances acceptability of payments for these merchants by offering a diverse range of instruments at competitive fees.

    Adnan Ali, CEO of APPS, said in a statement, “APPS was founded with the primary aim to revolutionize the digital payments services in Pakistan, and expand as a regional fintech player.

    “We are thankful to the State Bank for continuing to support us and creating a space for Fintechs, and especially the Payment Systems Department headed by the forward thinking leadership of Sohail Javaad.”

    Arshad Raza, Chairman of the Board for APPS, said in a statement: “When we invested in this startup envisioned by Avanza Solutions, we always believed that Pakistan’s payments market would be immensely lucrative and would see unmitigated performance in the coming years.

    “This commercial licenseis a testament to that vision.It is with great pride that we celebrate this day as part of the revolution in transforming Pakistan into a cashless society.”

  • Rs137.8bn cash withdrawn through ATMs during Eid Holidays: SBP

    Rs137.8bn cash withdrawn through ATMs during Eid Holidays: SBP

    KARACHI: State Bank of Pakistan (SBP) on Monday said that general public made cash withdrawal to the tune of Rs137.8 billion during holidays of Eid ul Fitr.

    A record Rs.827.2 billion were withdrawn through 63.2 million transactions during Ramadan and Eid holidays, whereas Rs.137.8 billion were withdrawn through 11.6 million transactions during Eid holidays only.

    The SBP in collaboration with commercial banks has been taking a number of steps in order to ensure maximum availability of ATM related services to its customers especially during Ramadan and long holidays including Eid and other festivals.

    Consequently, the joint efforts of SBP and commercial banks saw an average of 96.5% uptime recorded in ATM services during Ramadan and Eid-ul-Fitr. This further improved to 98% uptime, during the Eid-ul-Fitr holidays.

    SBP initiated a Special ATM Monitoring exercise during the holy month of Ramadan and on long EId-ul-Fitr holidays keeping in view the high demand for cash.

    In this regard a dedicated team within SBP was formed to oversee the nationwide ATM Operations of all banks through both On-site and Off-site inspections and monitoring.

    Dedicated SBP staff remained available round-the-clock to liaison with banks in order to ensure that uninterrupted ATM related  services remain available to the  customers during the long Eid-ul-Fitr holidays spanning over nine days.

    SBP teams received more than 500 complaints from public that were immediately taken up with the banks for resolution in the shortest possible time.

    SBP appreciates efforts of the banks in ensuring high availability of ATMs during Ramadan and Eid holidays.

    The ATM uptime has also been encouraging as it was difficult for banks to mobilize ATM Monitoring teams on-ground for rectification of issues because of mobility restrictions and issues related to availability of spare parts due to closure of markets etc.

    SBP firmly resolves to keep facilitating public and carrying out similar exercises in future as well to facilitate the general public at large.