Day: June 29, 2023

Minister of State for Petroleum, Dr. Musadik Malik, said on Wednesday that the government had introduced a new policy of a ‘bonded warehouse’ to eliminate the problem of dry outs in the petroleum sector.

Under this policy, he explained that foreign companies engaged in the legal oil business worldwide could construct bonded warehouses for oil storage in major cities. This initiative would not only bring foreign exchange reserves to Pakistan but also ensure the availability of petrol and diesel in the country at all times.

Furthermore, it would break the monopoly of a few oil marketing companies, which had previously created artificial shortages of oil in the country under various pretexts. The policy would also discourage illegal hoarding of oil for higher profits, he added.

Addressing a press conference, Dr. Musadik stated that the government was taking appropriate and comprehensive measures to maintain or gradually lower energy prices, including petroleum, gas, and electricity.

He added that foreign companies storing petroleum and diesel in bonded warehouses would need to register themselves in Pakistan and open business accounts in local commercial banks. This would resolve the issue of LC (Letter of Credit) confirmation, as these companies would conduct business transactions in dollars or Pakistani rupees directly through banks.

Additionally, it would relieve pressure on the country’s foreign exchange reserves and provide some leeway for the government to make various payments. Dr. Musadik emphasized that this initiative would eliminate the charges associated with LCs, which were previously passed on to the end consumer.

He asserted that this would be a significant relief and facilitation for small filling stations that faced difficulties during oil shortages, as they would now be able to continue their business by purchasing oil from the bonded warehouses.

Dr. Musadik stated, “On behalf of the Prime Minister, I am sharing this good news with the people, as it is Eid festivities, and we should set aside political talks for a while. Today, I will not speak about what the PTI is doing or has done to bring the country to the verge of collapse. It’s Eid celebration, so it is the responsibility of the government to instill hope in the people.”

The Minister of State for Petroleum mentioned that all criticism from the PTI regarding the Russian oil agreement and its shipment had now subsided, as the second oil shipment from Russia had also arrived in Pakistan.

He highlighted that the coalition government recently made a deal with Azerbaijan on its own terms and conditions for inexpensive gas. Under this deal, Azerbaijan would offer a gas tanker every month, and it would be up to Pakistan whether to make the purchase or not. He stated, “We will purchase this gas if the price is favorable to us.”

This deal would also help end gas shortages in the country during the winter season. Dr. Musadik remarked, “We have arranged inexpensive oil and gas and have also implemented an effective and viable solution to address the problem of dry outs in the petroleum sector.”

Additionally, he mentioned that as part of the government’s commitment to promoting renewable energy, the Prime Minister had launched four solar energy projects with a cumulative capacity of 10,000 megawatts.

The Prime Minister had also instructed the development of a comprehensive plan to redirect all major petroleum companies in Pakistan toward renewable energy, green hydrogen, and green ammonia, he added.

Source: Pro Pakistani

The reduced rates of tax would only be applicable on transactions of disposal of securities of listed companies carried out under the system of the National Clearing Company of Pakistan Limited (NCCPL).

Through Finance Act 2023, now it has been provided that only those transactions will qualify under this section (37A) which are effectively settled through NCCPL. If they do not fall under that classification then provisions of Section 37 which provides for a different rate of tax shall apply.

The FBR has also amended Income Tax Ordinance 2001 through Finance Act 2023 in this regard.

Another very important change has also been made in the schedule relating to tax on capital gain on listed shares.

This is effectively the correction of a mistake in the law as stood before the Finance Bill 2023. The mistake has, however, been partly removed.

A tax expert told ProPakistani, “As stood before the proposed amendment any capital gain on the disposal of listed securities is subject to a zero percent tax rate if the holding period is more than five years. Nevertheless, this provision is applicable only for shares acquired on or after July 1, 2022. For any shares acquired before July 1, 2022, the rate of tax was prescribed at 12.5%. In our view, this is a wrong and a discriminatory law”

“These changes propose a rectification amendment in this provision. Now it is proposed that the rate of tax will be zero if the shares are acquired before June 30, 2013,” he added.

The tax expert further stated that, “For the period of acquisition between July 1, 2013, and June 30, 2022, the rate of tax of 12.5% has been retained. This does not make sense. There has to be a reason why the period from July 1, 2013, to June 30, 2022, is discriminated against for the purposes of levy of tax.”

The FBR has issued S.R.O. 776(I)/2023 to amend the Income Tax Rules, 2002.

The procedure of capital gain on disposal of securities will remain applicable on transactions of shares of listed companies as recorded in the system of the National Clearing Company of Pakistan Limited (NCCPL).

Under the amended rules, the FBR has clarified that the provisions of section 37A shall remain applicable on transactions of shares of listed companies as recorded in the system of NCCPL and reported in accordance with the Eighth Schedule of the Income Tax Ordinance 2001.

Under the new rules, section 37A (Capital gain on disposal of securities) shall not apply to the disposal of shares of listed companies otherwise than through registered stock exchange and which are not settled through NCCPL.

For the purposes of the second proviso to sub-section (1) of section 37A, “shares of a listed company” shall not include units of a mutual fund or collective investment scheme or a REIT scheme or derivative products and provisions of section 37A shall remain applicable on disposal of such units, schemes or products.

The State Bank of Pakistan shall not allow the transfer or registration of repatriable shares unless a prescribed certificate from the Commissioner, to the effect that the tax liability under sub-section (6) to (10) of section 37 is discharged, is provided by the person selling the shares, the revised rules added.

A tax expert sadi that the capital gains on disposal of listed securities are governed by a special system that is effectively applicable only for the transaction routed through NCCPL which is also the tax collection agent. These provisions are governed by Section 37A read with Section 100B of the Income Tax Ordinance 2001.

Source: Pro Pakistani