Day: January 5, 2022

The government is revisiting its decision to increase the tax on the telecom industry after receiving backlash following the announcement of the mini-budget.

The Minister of IT and Telecom, Aminul Haq, does not support the proposed taxes in the mini-budget.

The Minister for Finance, Shaukat Tarin, told Dawn that a meeting, with the Minister of IT in attendance, has been scheduled between the stakeholders to address their concerns. He remarked that the telecom sector is “close to his heart” and that he would look into its problems.

Prior to this, the telecom companies had written a letter to the Ministers for Finance and IT, stating that the proposed increase in the telecom sector tax would decrease the role of the telecom industry in terms of GDP growth. They stated that they were worried about the government’s decision to increase withholding tax (WHT) from 10 percent to 15 percent in the mini-budget and the GST to 17 percent.

Their letter conveyed the industry’s concerns regarding the government’s decision. It detailed that 30 percent of the population is below the poverty line, which is why increasing WHT on all the subscribers is unfair.

Telecom companies said that after the government’s detailed deliberations with the industry over more than a year, it had approved the reduction of WHT from 12.5 percent to 10 percent this year through the Federal Budget that was approved in June 2021, along with another reduction from 10 percent to 8 percent in the next financial year. Just six months after the decision, the government’s reversal will affect the policies and the confidence of the investors.

The telecom companies also opposed the increase of GST to 17 percent for cellular mobile handsets, tablets, and PCs in the letter, and stated that an increase in their prices would affect the affordability of the masses and digitalization. Moreover, the companies’ chiefs are confident that the concerned ministers will stop the increase in both the taxes.

The CEO of Jazz, Aamir Hafeez Ibrahim, tweeted on Tuesday that he was disappointed to see Pakistan thinking of levying a 15 percent tax while other countries are subsidizing internet services.

Source: Pro Pakistani

The Pakistani Rupee (PKR) held out against the US Dollar (USD) in the interbank market today. It appreciated by one paisa against the greenback after hitting an intra-day low of Rs. 176.75 against the latter during today’s open market session.

It appreciated by 0.01 percent against the USD and closed at Rs. 176.74 today after gaining 23 paisas and closing at 176.75 in the interbank market on Tuesday, 4 January.

The rupee held its own against the USD based on the news that the federal Cabinet had agreed to make the details of sovereign guarantees public to meet another condition of the International Monetary Fund (IMF).

Moreover, foreign exchange inflows through the Roshan Digital Accounts (RDAs) were recorded at a total of $3.16 billion by the end of December, according to data released by the State Bank of Pakistan (SBP). The country registered inflows of $244 million in December as compared to $239 million in November, which depicts a month-on-month increase of 2.1 percent.

A few dozen fiscal improvements are making headway against inflationary pressures and are putting a good amount of weight behind the exchange unit but a few matters need attention.

The currency rate is one of the most difficult topics to discuss and predict in Pakistan nowadays. The country shoulders a wide canvas of balance-of-payment issues that have never been properly addressed, which is why the IMF has been called on so many times. Additionally, the trade deficit has been growing steadily for decades as a result of reduced exports and rising imports to reach an all-time high only now. Even $31 billion in annual remittances is insufficient to close the deficit and support the local unit.

Discussing the rupee’s near-term outlook in a news column, the former Treasury Head of Chase Manhattan Bank, Asad Rizvi, explained how the IMF involvements have influenced the exchange ledger. He wrote: “…it is worth noting that rupee gained substantially during the IMF suspension period, hitting 152.25 in May 2021. [However, ever] since the beginning of the new fiscal year, PKR started losing its gloss, the balance of payment pressure mounted as the trade gap began widening due to record imports while export growth was not enough to fill the gap”.

The PKR also posted losses against the other major currencies in the interbank currency market today. It posted losses of 94 paisas against the Pound Sterling (GBP), 24 paisas against the Canadian Dollar (CAD), 47 paisas against the Australian Dollar (AUD), and nine paisas against the Euro (EUR).

Conversely, the rupee held out against both the Saudi Riyal (SAR) and the UAE Dirham (AED) in today’s interbank currency market.

Source: Pro Pakistani

The Economic Coordination Committee (ECC) authorized the import of 50,000 Metric Ton (MT) of Urea on a Government-to-Government (GoG) basis from the People’s Republic of China on an immediate basis.

The decision was made with the Federal Minister for Finance and Revenue, Shaukat Tarin, overseeing proceedings of the Economic Coordination Committee (ECC) of the Cabinet on Wednesday.

Ministry of Industries and Production tabled a summary for the import of Urea from China by the Trading Corporation of Pakistan (TCP). The ECC, after deliberation, allowed the import of 50,000 MT of Urea on a GoG basis from China on an immediate basis, subject to clearance from the Pakistan Standards and Quality Control Authority (PSQCA). TCP was also tasked to negotiate the price with the Chinese suppliers authorized by the Government of China for further import of Urea.

The ECC also approved requests of Technical Supplementary Grants (TSG) presented by the Petroleum Division and Finance Division. The request of the Power Division for TSG was also approved, subject to the reconciliation with Finance Division.

Ministry of Commerce submitted a summary for rationalization of tariff on import of vehicles and other items requested by MOIP and other sectors. The meeting discussed the summary in detail and approved recommendations of the Tariff Policy Board with some modifications. The forum also decided to review some recommendations relating to the automotive sector after six months.

Federal Minister for National Food Security and Research, Syed Fakhar Imam, Federal Minister for Industries and Production, Makhdoom Khusro Bakhtiar, Federal Minister for Energy, Hammad Azhar, Federal Minister for Privatization, Muhammed Mian Soomro, Federal Minister for Water Resources, Chaudhry Moonis Elahi, Adviser to the Prime Minister on Commerce and Investment, Abdul Razak Dawood, Federal Secretaries and senior officers attended the meeting.

Source: Pro Pakistani

The government is likely to remove all tax exemptions by the next budget, i.e., for the fiscal year 2022-23 which would entail around Rs. 350 billion additional revenue measures.

Chairman FBR Dr. Ashfaq Ahmed revealed this while briefing the Senate Standing Committee on Finance. “All the subsidies will go in the next budget,” said the Chairman, adding, “these total up to Rs. 700, but we are only removing Rs. 343 billion.” The remaining of which is around Rs 350 billion, he further added.

The Chairman FBR said the reforms were based on “no tax exemptions – only targeted subsidiary”.

Explaining the Finance Supplementary Bill 2021, the Chairman FBR held a longer briefing with tables and points, explaining how misused the subsidies were and how the FBR was moving to plug the gaps.

The Senate Standing Committee on Finance, which met under the chairmanship of Senator Talha Mehmood on Wednesday, termed the Finance Supplementary Bill 2021 as ‘a tsunami of inflation’ in the country.

The committee meeting discussed in detail the pharmaceutical industry, which according to the Chairman FBR, generated a revenue of Rs. 700 billion.

The FBR officials informed the committee that out of 800 pharma manufacturers, only 453 were registered. It said Rs. 35 billion input tax was passed to patients, while there was an undocumented supply chain of Rs. 530 billion, adding that there were Rs. 700 billion turnovers. It also highlighted the exempt input and output documentation issues.

They said the sales tax on the pharmaceutical sector would be imposed at the import stage, adding that the new reforms would also lead to an expeditious payment of refunds (within one week) and a reduction in prices.

The committee expressed apprehensions that the new regime would raise the prices of medicines instead of reducing them. It feared that the money bill would cast a negative impact on the common man with the poor as the prime sufferers.

Senator Farooq Hamid Naek observed that the government revenue was being increased by oppressing the common man. The committee directed the officials concerned to write a letter to the Drug Regulatory Authority of Pakistan (DRAP) to appear before the committee and brief it on the definition of drugs and their categories under the Drug Act while defining whether or not the “vitamins” fell under the definition of drugs. It also sought details from DRAP of the spurious drugs and the unregistered pharmaceutical companies in Pakistan.

The committee, after a detailed briefing of the Chairman FBR on the salient features of the tax reforms, decided to adjourn the meeting till January 6 to discuss the Finance (Supplementary) Bill, 2021 clause-by-clause and make recommendations under Article 73 of the Constitution.

The FBR officials informed the committee that the International Monetary Fund had demanded the imposition of a 17% across-the-board GST and the withdrawal of exemptions at Rs. 700 billion.

The Chairman FBR said the new reforms deviated from the rule of the thumb with the Value Added Tax, i.e., 17% across-the-board GST without any exemptions, and defended reduced rates of GST on agriculture tractors, fertilizers, inputs of fertilizers sector, pesticides, used clothing and footwear, and cinematographic equipment.

FBR also defended the imposition of GST on food items, e.g. wheat, wheat flour, wheat bran, rice, vegetables, fruits, pulses, fresh poultry, fish, meat, milk, sugarcane, and beet sugar (raw materials), and on the educational items including books and stationery.

FBR briefed the committee on the exemptions that the government intended to give to the various sectors, which included Rs. 71 billion on the goods, Rs. 2 billion on the common usage products, Rs. 160 billion on pharmaceutical products, and Rs. 112 billion on machinery with GST refundable/adjustable. “The common man is hoodwinked by the mechanisms of tax devised,” stated Senator Farooq Hamid Naek.

Senator Musadik Masood Malik said the tax reforms were based on the consumption of the consumers and not the income, whereas the Chairman FBR termed the new reforms as the “Zero Impact Budget”.

Regarding the revenue-related measures in the new tax reform policy, the committee was apprised that advance taxes on cellular services, advance taxes on vehicle registration, and advance taxes on foreign TV serials, dramas, and commercials were also imposed. It was further informed that the targeted subsidiary items would benefit the common man by Rs. 19 billion.

Source: Pro Pakistani

Prime Minister (PM) Imran Khan chaired a meeting to review the progress on development projects in Balochistan yesterday in Islamabad.

The meeting was given a comprehensive overview regarding Improvement in Governance Structure, Execution of Government-to-Government Projects, the Fisheries Sector, Command Area Development, the Agriculture Sector, and the establishment of Nursing Colleges.

The attendees of the meeting were given a detailed briefing on Road Networks, Power Sector Projects, Projects by Maritime Affairs, the IT and Telecom Sector, Industries and Production, and Development Projects in Gwadar.

Governance

Out of a total of 161 projects, 59 will be completed in the current fiscal year. The goal is being achieved by improved monitoring and governance at the provincial and federal levels.

The premier said, “Expeditious execution of the projects should be ensured along with the establishment of a robust permanent structure that will ensure the development of deprived areas of Balochistan in the long run”.

Road Structure

The attendees were told that a total of 3,788 km of road infrastructure is being developed in Balochistan to improve connectivity. The projects are already ahead of the timelines. Moreover, a 796 km Karachi, Quetta Chaman Road project is also underway, and its on-ground work will commence soon.

Fisheries Sector

One of the major concerns of the local fishermen was of the illegal fishing trawlers that has been addressed on a priority basis by improved patrolling by the concerned agencies. This has also resulted in the conservation of the fishing stock.

Additionally, the Ministry of Maritime Affairs, in collaboration with the Kamyab Jawan Program, is providing loans to local fishermen for the improvement of techniques and boats, which includes the installation of a Vehicle Monitoring system.

Command Area Development

Command Area Development projects are expedited to efficiently manage water resources and the development of the agriculture sector in the province. The attendees were informed that the Katchi Canal project is near completion.

A Foot and Mouth Disease Free area where cattle will be vaccinated and proper facilities to meet international standards for the export of processed meat is also being established. This will generate foreign exchange by increasing exports and will offer employment.

Power and Petroleum

The attendees were informed of the ongoing power projects, including mega projects and off-grid projects. The distribution of 3000 solar panels will commence soon, and a subsidy on LPG has been proposed to help the locals and resolve issues pertaining to energy demands.

The Ministry of Maritime Affairs detailed the progress of the import of Virtual Pipeline LNG, whereby licenses that will improve the gas situation in the province, and especially Gwadar, are being granted.

IT Sector and Distance Learning

The attendees were notified that 6,372 trainings have been given to the local youth to empower them for tech-related jobs, until now. Moreover, a program with 35,000 trainings is being launched to teach the youth freelancing and other market competitive tech courses.

Air-Connectivity

The attendees were told that the project on the development of Turbat Airport is at the bidding stage and steps are being taken to increase flight operations between Turbat, Gwadar, and Quetta.

Industrial Development

The progress on the date processing plants in Turbat, meat processing plants, and the Metal Park, including the areas of Chaghi, Khuzdar, Lasbeela, and Gwadar, was conveyed to the attendees of the meeting.

The government is engaging the private sector for a cost-sharing model of olive oil extraction plants in Khuzdar and other areas of the province.

Moreover, the project for the establishment of a boat industry in Gwadar is underway, with all the stakeholders on board. Its purpose is to modernize the fishermen’s existing fleet of boats.

The establishment of a 1.2 million gallon water plant in Gwadar, which is expected to be completed before the summer, was also highlighted.

PM Khan directed the concerned stakeholders to expedite the projects, and especially those that have a high impact on the livelihoods of the locals.

The meeting was attended by Federal Ministers, Shaukat Tarin, Fawad Chaudhary, Murad Saeed, Asad Umar, Hammad Azhar, and Syed Ali Haider Zaidi; and the Chief Minister of Balochistan, Abdul Quddus Bazenjo; SAPM CPEC Khalid Mansoor; and senior civil and military officers.

Source: Pro Pakistani

With an objective to improve the timely inflow of foreign exchange from export proceeds in the market, the State Bank of Pakistan (SBP) has amended the foreign exchange regulations and directed the exporters to bring export proceeds within a maximum period of 120 days from the date of shipment.

Earlier, the exporters were required to bring their export proceeds within a maximum period of 180 days. This move also brings Pakistan’s regulations closer to international best practices.

The full export value of goods exported from Pakistan and declared to the Customs authorities should be received on the due date for payment or within 120 days from the date of shipment, whichever is earlier, through an Authorized Dealer either in convertible foreign currency, in which the Authorized Dealer maintains accounts, or in Pakistan rupee from a repatriable rupee account of a nonresident, the circular issued by SBP stated.

Where the terms of sale provide for payment earlier than 120 days, including DP/CAD/sight bills, Authorized Dealers may allow extension in the realization period if they are satisfied with the written explanation given for the delay in the realization by the exporter.

Such explanation must be supported by documents/communication from the foreign buyer and the extension must not exceed the period beyond 120 days from the date of shipment. Authorized Dealers will not allow extension in the realization period, once they have reported the case as overdue to FEOD, SBP-BSC, it further added.

The above changes will be applicable on all transactions authorized by the Authorized Dealer, including approval of electronic/manual Form-E or issuance of financial instrument in Pakistan Single Window with effect from January 6, 2022. Realization of export proceeds for earlier transactions may be undertaken as per the instructions applicable at the time of execution of such transactions.

It is pertinent to mention here that in the recent past, SBP has introduced a number of policy measures in its foreign exchange regulations to facilitate exporters. These include

i. Allowing up to 10 percent of exporters’ annual exports for equity investment abroad to establish overseas subsidiary/branch office

ii. Allowing exporters who are eligible to retain part of their export proceeds to make payments abroad from their export retention account for a number of additional purposes including marketing & promotions, purchase of design/ patterns, warehousing, consultancy service, etc.

iii. Facilitating e-Commerce by allowing exporters to sell their products directly through their own websites as well as through international digital marketplaces including Amazon, e-Bay, Ali Baba, and

iv. Allowing exports by way of dispatch of shipping documents directly to the foreign buyer, to make exporters competitive in the international market.

v. The new measure is expected to positively impact foreign exchange inflows in the market. SBP is of the view that flexible exchange rate has appropriately played its role as a shock-absorber and it is important that its role be complemented by strong exports proceed realization.

vi. The new measure is expected to positively impact foreign exchange inflows in the market. SBP is of the view that flexible exchange rate has appropriately played its role as a shock-absorber and it is important that its role be complemented by strong exports proceed realization.

Source: Pro Pakistani