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Tag: Shaukat Tarin

  • IMF should not object to PM relief package: Tarin

    IMF should not object to PM relief package: Tarin

    ISLAMABAD: Pakistan’s Finance Minister Shaukat Tarin on Wednesday said International Monetary Fund (IMF) should not object to the relief package announced by the prime minister as the country is generating own resources for the package besides increasing the revenue.

    The Finance Minister addressing a new conference here said negotiations have been held with the IMF over this relief package announced by the Prime Minister. He said the IMF should not have objections on the package as we are meeting it from our own resources including enhancement in tax revenues. He said this will not increase our fiscal deficit.

    READ MORE: PM Imran reduces, freezes POL prices

    Finance Minister Shaukat Tarin said the government is providing a subsidy of one hundred and four billion rupees on petroleum products in order to provide relief to the people.

    He said given soaring prices of petroleum products in the international market, we have reduced the petroleum levy and brought to zero the sales tax.

    Tarin said that those using seven hundred units of electricity per month will be provided with subsidy of five rupees per unit for the next four months. For this, he said, we will have to give a subsidy of 136 billion rupees.

    Shaukat Tarin said the government has also given industrial relief package to promote industries in the country. He said the package envisages tax holiday for overseas Pakistanis and incentives for the turnaround of sick industries.

    READ MORE: Businessmen hope $5bn investment under PM package

    The Finance Minister said tax exemptions have also been given to the IT sector in order to significantly bolster its exports. He pointed out that the IT sector grew by forty seven percent last year and currently growing by seventy percent. He said we target one hundred percent growth in this sector during the next year. Shaukat Tarin said our trade deficit has also come down.

    Highlights of the press conference:

    Petroleum relief: Prior to Prime Minister’s relief package, govt. was bearing Rs 39 billion fortnightly loss through budgeted PL and Sales tax. At that time, levy on petroleum was Rs17.92 per litre and on Diesel, it was Rs13.30 per litre. With the increase in international prices and Prime Minister’s relief Package, the government will further incur loss of Rs 13.9 billion and fortnightly loss will expand to Rs52 billion. Now petroleum levy and sales tax reduced to zero percent (except for petrol Rs1.8 per Litre)

    The estimated budget loss in the next four months would be Rs250-300 billion just from petroleum relief with the assumption of $100/bbl weighted average international price.

    Electricity relief: Prime Minister announced reduction of Rs. 5 per unit in base rate for four months consecutively. The package will be applicable to all commercial & domestic non-ToU ( non -Time of Use) consumers having monthly consumption up to 700 units, excluding lifeline consumers. Overall relief is estimated at Rs 136 billion.

    Industrial package:

    READ MORE: Tax amnesty launched for setting up new industrial units

    1- Investment in new industrial units and expansion and modernization of existing units. 5 per cent across the board payment of tax for all amount invested Minimum investment threshold is Rs. 50 million.

    Industrial unit to be set-up as a company Commercial production to begin by June 30, 2024. Previous beneficiaries of Amnesty Schemes of 2018 and 2019 will not eligible. Bank loan defaulters in last three years will not be eligible.

    2- Incentive for Revival of Sick Units

    Applicable only to companies. Industrial units facing accumulated losses in continuous 3 years to be treated as sick units.

    Acquiring company allowed to adjust losses of the sick units against its income for consecutive three years.

    Revival of the sick unit to be completed within three years of acquisition. Incentive for Foreign Investment in Industrial Sector.

    3- Incentives for Overseas

    Pakistan citizens who are non-resident for five years and resident Pakistani having declared foreign assets are eligible to invest.

    One-time tax credit equal to 100 per cent of PKR equivalent of remittance to be availed in 5 years. Investment to be made in a new industrial unit. Commercial production to start by 30th June, 2024. New industrial unit to be a company

    IT package:

    READ MORE: PM Imran directs implementing incentives for IT industry

    • Tax exemption for IT/TES (Information Technology Enabled Services) firms & free lancers for 5 years.

    • Reduction in Capital Gain Tax on VC funding into Start ups to zero percent during 5 years.

    • In a historic move, PM has directed to allow IT/ITeS(Information Technology Enabled Services) Companies and Freelancers to retain 100 per cent amount of remittances received through proper banking channels, in FCY Accounts, without any compulsion to convert them into PKR.

    • Furthermore, there will be no restriction on outward remittances from FCY account for PSEB registered IT Companies and Freelancers.

    • Prime Minister has also directed SBP to introduce Financing streams for IT/ITeS sector and Freelancers keeping in view operational architecture and industry needs for these sectors.

    • Recommendations of Pakistan Technology Start-up Fund were also approved by the Prime Minister as part of this historic package for the creation of a Public Private Partnership (PPP) venture capital fund. Ignite National Technology Fund will create this Fund through PPP.

    READ MORE: ECC approves Ramzan relief package worth Rs8.28 bn

    Benefits:

    • Bringing internationally parked Foreign Currency to Pakistan.

    • Encourage foreign companies to shift business to Pakistan.

    • Employment creation and entrepreneurship promotion in the country.

    Trade Deficit:

    US $ mn November December January February Exports 2901 2765 2614 2808 Imports 7899 7666 6891 5903 Trade deficit 4998 4901 4277 3095

    • Significant decline in trade deficit due to significant decline in imports in the month of January & February.

    • Compared to 1HFY22, the current account deficit expected to decline in 2HGFY22. Already visible from trade deficit.

    • The CAD reported by SBP is higher due to some imports not reflected at PBS data due to sensitive nature but recorded by EAD. Importantly, the import differential is funded.

    • It is pertinent to note that trade deficit is lowest since June 2021. This will bring the deficit down significantly.

    Inflation:

    • February CPI is lower at 12.2 per cent as compared with 13 per cent in January.

    • Adjusted with tomatoes prices the February inflation would have been 10.8 per cent YoY basis.

    • Similarly, if we adjust the month on month tomatoes prices, the inflation would have been only 0.6 per cent, on month-on-month basis.

    • It is pertinent to note that prices are flat since November 2021, month-on-month basis. Dec (-0.02 per cent), January (0.4 per cent) and February (0.6 per cent) adjusted with tomatoes prices.

    • Lastly, Core inflation is witnessing a declining trend in February at 7.8 per cent as compared with 8.2 per cent in January.

    • Going forward, it is expected that tomatoes prices will experience decline from mid March due to arrival of crop in Punjab. First week prices of Tomatoes have already declined by 27 per cent.

    Key Takeaways of OICCI Press Conference:

    • 207 Companies have invested $18.5 billion since 2012. They pay one 3rd of our taxes.

    • They believe Pakistan is better than 6 out of 10 regional countries in 2021 verses 3 out of 10 in 2019.

    • In 2021, 68 per cent expect accelerating growth in their businesses in the next 2-3 years vs only 27 per cent in 2019.

    • They want long-term policies to be prepared by the government to help them invest in Pakistan. Moreover, they want further improvement in ease of doing business.

    • Given, the significant improvement in business climate, they want to conduct international road shows to showcase the opportunities in Pakistan.

    ? Sehat Sahulat Program (Beneficiary Satisfaction Based on 3rd Party Feedback Survey)

    Satisfaction rate ( per cent) Total Complaints Total Resolved Total Hospital Visits Total Families Enrolled 97 68,767 67,425 3,247,198 27,694,903

    • 96 per cent beneficiaries are satisfied with the treatment provided by Sehat Sahulat program.

    • 54 per cent beneficiaries are satisfied with the hospital services.

    • 97 per cent beneficiaries are satisfied with the hospital staff behavior.

    • 98 per cent beneficiaries are satisfied with Sehat Sahulat program staff behavior at hospital.

    • 98 per cent beneficiaries were not asked to pay for services during treatment.

  • IMF board approves $1.059 billion tranche for Pakistan

    IMF board approves $1.059 billion tranche for Pakistan

    ISLAMABAD: The Executive Board of the International Monetary Fund (IMF) on Wednesday approved sixth tranche under $6 billion Extended Fund Facility (EFF) for Pakistan.

    Finance Minister Shaukat Tarin announced this in a Tweet. “I am pleased to announce that IMF Board has approved 6th tranche of their program for Pakistan.”

    https://twitter.com/shaukat_tarin/status/1488928059562545159

    Pakistan will get around $1.059 billion after the IMF Board approval. The IMF on November 21, 2021 stated that its staff had completed the sixth review and the release of next tranche was subject to approval from the executive board, which was to be scheduled to meet on January 12, 2021.

    READ MORE: IMF wants Pakistan to improve tax to GDP ratio to 20%

    The IMF also linked the approval of the next tranche with certain conditions, including autonomy of State Bank of Pakistan (SBP) and withdrawal of tax exemptions to the tune of around Rs350 billion.

    READ MORE: Pakistan to emerge as food surplus country: PM Imran

    Pakistan had requested to extend the date for scheduled meeting of the IMF board up to January 28, 2022 and later it was further requested to extend up to February 02, 2022.

    READ MORE: IMF intervention to add economic miseries of Pakistan

    In meantime, the government presented and got approval the Finance (Supplementary) Act, 2022 and SBP Amendment Act to comply with the conditions of the IMF.

    Analysts said that the transfer of latest IMF tranche would help the country to improve foreign exchange reserves besides it would also support the Pak Rupee (PKR).

    READ MORE: SBP responds to misconceptions on amendments to State Bank Bill

  • Supplementary bill aimed at documenting economy: Tarin

    Supplementary bill aimed at documenting economy: Tarin

    ISLAMABAD: The Finance (Supplementary) Bill, 2021 is aimed at documentation of economy instead generating revenue, Finance Minister Shaukat Tarin said on Thursday.

    On the floor of the lower house, the finance minister said that the supplementary bill had been drafted to document the economy. He said that in the past no such efforts were made to document the economy.

    READ MORE: Retail sector’s sales worth Rs16 trillion not in tax net: Tarin

    Tarin said that the retail sector had annual turnover of Rs20 trillion, out of which only Rs3.5 trillion was documented.

    He said that the government was endeavoring to document the supply side in order to boost the direct taxes.

    Meanwhile, spokesperson to Minister of Finance, Muzammil Aslam said that supplementary finance bill was aimed at documenting the national economy, capturing the tax value chain and enhancing taxpayers penetration through simplification of revenue system for broadening of the tax base.

    READ MORE: Tarin warns tax evaders of strict actions

    Addressing a press conference along with Adviser to Prime Minister on Parliamentary Affairs Dr Babar Awan, Muzammil said that other objective of the reform measures were to discourage the rent-seeking culture, taxing the rich and transferring it to improve the living standards of under-privileged segments of the society.

    He termed the reform measures introduced in the money bill as historic, which would have not any negative impact on common people in the country, adding that it would help in documentation of economy and overcome the tax evasion.

    He said that previous regimes had put the poor under tax burden, where as the wealth of the ruling class kept on increasing. He said that the supplementary finance bill would have no impact on common people, even if there were any such measures, these have been removed.

    READ MORE: Tarin directs FBR to ensure security of taxpayers’ data

    Muzammil Aslam further said that private sector credit intake witnessed significant increase and reached to Rs1,400 billion, adding that government was also working to promote public-private partnership to improve service delivery of public sector institutions to turn them into profit oriented entities.

    The government had also introduced steps for the autonomy of State Bank of Pakistan he said adding that out of 10 board members, government would appoint 08 members, besides taking measures for strengthening the monetary committee.

    READ MORE: Mini-budget: Advance tax on motor vehicles doubles

  • IMF wants Pakistan to improve tax to GDP ratio to 20%

    IMF wants Pakistan to improve tax to GDP ratio to 20%

    ISLAMABAD: Finance Minister Shaukat Tarin on Tuesday said the International Monetary Fund (IMF) wanted Pakistan to improve tax to GDP ratio to 20 per cent through structural changes.

    Improving tax to GDP ratio to 20 per cent from 9 per cent is in the benefit of the country, he added.

    Addressing to the interactive session with media persons along with Federal Minister for Energy Muhammad Hammad Azhar, Governor State Bank of Pakistan (SBP), Dr Reza Baqir, Minister for Information and Broadcasting, Fawad Hussain Chaudhry, State Minster for Information Farrukh Habib and Special Assistant to Prime Minister on health, Dr Faisal Sultan, he said that the existing tax to GDP ratio in the country was the lowest.

    READ MORE: IMF intervention to add economic miseries of Pakistan

    Tarin said, the IMF wanted Pakistan to collect additional taxes of Rs700 billion by eliminating various tax exemptions, however with negotiations with the team, the government was successful in convincing them of Rs343, hence declining the demand by Rs357 billion. The Minister said that out of this, Rs71 billion is taxed on luxury items of the rich.

    He said that despite the IMF demands, the government did not enhance taxes on various items and also did not do away with some exemptions including pesticide, fertilizer, tractors, and provident fund and food and beverages items. Tarin said: “We also subsidized solar panel and other items and paid 100 per cent tax on laptops.”

    “We have a Rs33 billion subsidy option that we can use as needed,” he said. The finance minister said that the government has given a tax exemption of about Rs350 billion which is not discussed anywhere.

    READ MORE: SBP responds to misconceptions on amendments to State Bank Bill

    He dispelled the misconceptions about the autonomy of State Bank of Pakistan (SBP). He said that even when the SBP is provided autonomy, all of its eight board members would be selected by the government, so there is no question of any compromise.

    The minister said that the government wanted to give autonomy to the State Bank of Pakistan and it would not be like in the past when the government used to overdraft Rs7 trillion and insisted on printing currency notes. He said that a total of eight board members of SBP will be nominated and appointed by the government and: “We want to empower the central Bank board.”

    Answering a question, he said that there is a market of Rs700 billion in the pharmaceuticals sector, but cosmetics and energy products made from this zero duty raw material of pharmaceutical allied will be taxed. “We have kept the exchange rate stable at Rs166,” he added.

    The finance minister said that the government had stabilized the exchange rate, which he said was impacted by the situation in neighboring country, Afghanistan.

    Governor State Bank of Pakistan (SBP), Dr Reza Baqir said that the decision of autonomy of any organization is made on its ownership and appointment there, and then in SBP this work is done by the government.

    READ MORE: Key policy rate goes up to 9.75%; SBP raises 250bps in less than month

    The SBP governor said that the interest rate in SBP is decided by the Monetary Policy Committee which is appointed by the government. He said that the Current Account Deficit (CoD) issue was more prevalent in the previous governments, which have been largely resolved by the present government.

    Federal Minister for Energy, Muhammad Hammad Azhar, said that Pakistan has a gas problem in winter because of which gas reserves in Pakistan are depleting day by day, due to which there is gas shortage at the domestic and industrial level in the country.

    The minister informed that no gas reserves have been discovered in the last few decades and: “We have delivered gas across the country which is primarily a matter of supply and demand.”

    He said that earlier gas reservoir deletion was up to 9 percent but now it has increased to 25 percent.

    Briefing the media persons on the flagship initiative of ‘Sehat Card’, Special Assistant to the Prime Minister on National Health Services, Regulations and Coordination Dr. Faisal Sultan said it was the physical manifestation of a compact done by the state with its citizenry for their well-being.

    READ MORE: Pakistan to emerge as food surplus country: PM Imran

    He said the health card, which provided health insurance worth Rs one million to each family per year, was now launched in Punjab after its successful implementation in Khyber Pakhtunkhwa. Initially, relatively poor people were covered, but the entire citizenry was included under the initiative after thorough analysis.

    From January 1, 2022, he said all the citizens having Azad Jammu and Kashmir, Gilgit Baltistan, Islamabad, and Punjab as the permanent addresses on their Computerized National Identity Card had been entitled to the health card.

    Highlighting contours of the initiative, he said every individual was being covered through his or her family head which had been explained in light of the policy of the National Database and Registration Authority (NADRA).

    He said a wide range of diseases that needed admission to the hospital was being covered under the health cards.

    The diseases included surgical and medical conditions, childbirth, dialysis, cancer and others Dr. Faisal said hospitals from both the private and public sectors were empaneled under the initiative, which would not only provide an opportunity to the government hospitals to improve their services by augmenting their budgets but also help the private sector to invest in far-flung areas.

    A thorough analysis of the facility was being done on a regular basis to address any irregularity if found with its utilization, he said while responding to a query.

    The SAPM said the sudden admission of a member of a family in hospital disrupted the household budget of almost every class including middle, lower-middle and others. The idea was to give health insurance to people to save them from such expenses.

    Terming the Sehat Sahulat Scheme a ‘silent revolution’ in the health infrastructure of the country, he said watchful management of the initiative would make it a game-changer for the sector.

    To another query, he said the initiative would not have any major impact on the public health budget.

    Special counters had been set up in every empaneled hospital where a layman was being sensitized about the programme, he said while responding to another question.

  • Retail sector’s sales worth Rs16 trillion not in tax net: Tarin

    Retail sector’s sales worth Rs16 trillion not in tax net: Tarin

    ISLAMABAD: Finance Minister Shaukat Tarin on Monday said that sales worth Rs16 trillion of the retail sector is not in the tax net.

    “The total sale of retail sector in the country is Rs20 trillion, and Rs16 trillion of it is not in the tax net,” he said while briefing the Senate’s Standing Committee on Finance and Revenue.

    The committee continued its deliberations under the chairmanship of Talha Mehmood on the fourth consecutive day to finalize its recommendations on the Finance Supplementary Bill 2021. The minister said the Federal Board of Revenue (FBR) had refunded some Rs50 billion in six months, which had never happened in any government’s tenure.

    READ MORE: Tarin warns tax evaders of strict actions

    He said the sale of pharmaceutical industry was around Rs700 billion but it was paying tax on only Rs100 billion.

    A number of sectors like fertilizer, pesticide, and agriculture did not fall under the tax regime, he added. Shaukat Tarin said the International Monetary Fund (IMF) wanted to tax Rs700 billion but the government brought the target down to Rs343 billion through negotiations.

    He said the IMF’s review meeting was postponed to January 28 on the government’s request. The minister said no additional tax was imposed on the infants formula milk of normal price, rather only expensive imported one was suggested to be taxed.

    READ MORE: Tarin directs FBR to ensure security of taxpayers’ data

    He clarified that all amendments pertaining to the tax were not being undertaken under the IMF’s pressure as the government already had the agenda to bring tax reforms for the socio-economic development of the common man.

    The committee chairman asked the government take the parliament on board whenever it would opt for any IMF programme in future.

    The minister said the government had a cushion of Rs33 billion to provide subsidy on laptops and solar panels. Tarin said the federal government was also considering to bring the agriculture income under tax and for that Punjab and Khyber Pakhtunkhwa governments had already agreed, while negotiations with the AJK and Gilgit Baltistan governments were in progress. “We will also convince Sindh and Balochistan in this regard.”

    He said the rise in exchange rate was due to international commodity prices and situation in Afghanistan.

    READ MORE: Mini-budget: FBR to generate Rs4.5bn through tax rate increase on cellular services

    The minister added that in order to promote tax culture, the government had launched a cash price scheme for the public. The supply chain could play an important role as Rs15 trillion could be collect from that source.

    Through track and trace system, cigarette and other industries were being brought under tax net, he added. With respect to the State Bank of Pakistan bill, the minister dispelled the impression of compromising the country’s autonomy.

    The government successfully pursued the IMF to omit five important clauses from the bill. The employment period of SBP governor would be reviewed by the government itself.

    While discussing the proposed Supplementary Finance Bill, the committee recommended withdrawing tax on desalination plants, and medical, surgical, dental and veterinary furniture. It also proposed to withdraw tax on machinery and equipment for development of grain handling and storage facilities, including silos.

    READ MORE: Mini-budget: Advance tax on motor vehicles doubles

    The committee also rejected additional tax on imported yogurt, butter, Desi ghee, milk and cream. The meeting was attended by senators Farook Ahmed Naek, Saleem Mandviwala, Sherry Rehman, Mohsin Aziz, Zeeshan Khanzada, Musadik Masood Malik, Syed Faisal Ali Subzwari and Faisal Saleem Rehman.

  • Tarin warns tax evaders of strict actions

    Tarin warns tax evaders of strict actions

    ISLAMABAD: Finance Minister Shaukat Tarin on Friday warned tax evaders and potential taxpayers to pay their liabilities before harsh actions initiated against them.

    At the launching of National Sales Tax Return, by Federal Board of Revenue (FBR), he asked the unregistered potential taxpayers to initiate paying taxes before the government reaches them within a couple of months with documentary evidence of their assets.

    “I assure the nation that change is taking place, we are making use of technology and will reach all potential taxpayers.

    Tarin said that with the help of technology, the government would reach to all those persons who have taxable assets but were not paying taxes  adding that there was now no need to issues notices as the government was already possessing date of millions of taxpayers.

    He said, the authorities would reach the tax-avoiders and provide them the tax returns with an opportunity to prove it wrong by consulting panel of auditors or pay the due taxes.

    “We will not harass, we will tell them what they possess. If they don’t pay, then the law would take its own course,” he added.

    Meanwhile, the minister congratulated federal and provincial revenue divisions for coming on a single platform and making payment of revenues easy for taxpayers.

    He said, since sales tax on goods was federal domain and sales tax on services was coming under provinces, hence it was creating hardships for taxpayers.

    Now, under the single platform, the taxpayers would be facilitated, adding that in previous system, if a company was operating in all the provinces, it had to deal with around seven agencies for filing returns, with chances of errors. However, now they would be required to file single tax under the new system.

    He said that the government was also working on further harmonization of system to facilitate taxpayers and expressed the hope that ease in tax deposit system would help enhance revenues.

    The minister said that three was no other way, if the country had to progress and prosper, there is need to enhance revenue collection. He cited example of Germany where he said there was no representation without taxation.

    He lamented that there were only 3 million taxpayers out of 220 million population in the country.

    He said, out of around Rs18 trillion retail sales, only Rs3 to Rs4 trillion were captured and Rs14 million sales are still missing from the tax system.

    Tax exemptions worth Rs343 billion withdrawn through mini-budget
  • Tax exemptions worth Rs343 billion withdrawn through mini-budget

    Tax exemptions worth Rs343 billion withdrawn through mini-budget

    The Pakistani government unveiled a mini-budget on Thursday, signaling the withdrawal of tax exemptions amounting to Rs343 billion.

    (more…)
  • Text of Finance (Supplementary) Bill, 2021

    Text of Finance (Supplementary) Bill, 2021

    ISLAMABAD: The federal government on Thursday presented the Finance (Supplementary) Bill, 2021 which is called mini-budget by many quarters due to changes in taxation system.

    According to Finance Minister Shaukat Tarin the government has reviewed tax exemptions. This withdrawal of tax exemption will not affect the common men.

    Following is the text of the Finance (Supplementary) Bill, 2021:

    THE FINANCE (SUPPLEMENTARY) BILL, 2021

  • Tarin assures car importers of maximum support

    Tarin assures car importers of maximum support

    ISLAMABAD: Shaukat Tarin, Adviser to the Prime Minister on Finance and Revenue, assured an association of car dealers and importers of maximum support in resolving their issues during a meeting held on Friday.

    (more…)
  • Prudent reforms helped improve tax-to-GDP ratio: Tarin

    Prudent reforms helped improve tax-to-GDP ratio: Tarin

    ISLAMABAD: Shaukat Tarin, Adviser to the Prime Minister on Finance and Revenue, Thursday said prudent fiscal reforms have helped in improving the tax-to-GDP ratio.

    He said this while addressing at an event organized by Pakistan Business Council.

    READ MORE: Tax to GDP ratio at 20% prime objective: Tarin

    The adviser highlighted the economic priorities of the government and said that the government is committed to introducing growth-oriented measures to stimulate economic growth, with a clear roadmap of strategic priorities, business facilitation, investment opportunities, revenue, and expenditure plans.

    The aspiration was to lay the foundation of higher inclusive and sustainable growth so that the economy withstands any shock. These policies stabilized the economy while simultaneously improving the growth prospects.

    READ MORE: FBR projects 12 percent tax to GDP ratio in three years

    He said that prudent fiscal reforms have helped in improving the tax-to-GDP ratio and improving revenue generation. Increasing tax collection and expanding the tax base were key objectives of the government’s financial agenda.

    The adviser identified priority sectors such as agriculture, IT, and industry modernization to boost exports and said special economic zones have been set up to attract foreign investment.

    READ MORE: Tax to GDP ratio slips to 11.4 percent in FY20

    The government is vigorously pursuing a “Make in Pakistan” policy to promote export-oriented industrialization in the country. The government’s efforts had been to further the investment climate and attract FDIs in the country.

    The Adviser also shared the steps taken to help the underprivileged through the social protection programs to improve the living standard of vulnerable segments of the society by empowering them.

    READ MORE: