Day: November 5, 2021

The Federal Board of Revenue’s (FBR) biggest documentation initiative of integration of big retailers with the FBR’s Point of Sales (POS) system may suffer a serious setback due to the alleged connivance of vendors and retailers to under-report sales and evade sales tax.

ProPakistani reliably learned that the big retailers called Tier-I retailers have started using FBR’s POS system in all major cities of the country. Retailers are displaying that their retail outlets are integrated with the FBR’s computerized system to record sales and taxes deposited. The consumers have been issued computerized receipts to be used in future prize draws of the FBR.

The data of the purchasers including their cell numbers have been fed into the system. The FBR is in the process of registration of big retailers with the help of the POS system.

The FBR had provided a list of vendors to the retailers, who were permitted to install point of sale software at the outlets of the retail outlets. The FBR has also provided names and contacts of 46 vendors operating in major cities like Karachi, Lahore, Rawalpindi, and Islamabad. These FBR’s approved vendors have installed the POS software at the business premises or retail outlets of the Tier-I retailers across the country.

The FBR has also offered incentives like a reduced sales tax rate and permission of charging Re. 1 per invoice from consumers to meet service charges to encourage registration.

According to the SRO 1006(I)/2021, the name is required to be recorded when the customer is liable for tax or credit or invoice value is above Rs. 100,000.

The POS Service Fee of Re. 1 per invoice shall be collected by the T-1 retailer from the customer and shall be deposited along with the monthly sales tax return, which is being amended to include a row for “POS Service Fee”.

The interesting part of the story is that the FBR has no mechanism to check the authentication of the installed software at the retail outlets by the concerned vendors. The FBR has not been engaged in the verification of authentication of the software installed by the vendors at the retail outlets. No such exercise has been carried out to verify the working of each software installed at the retailer’s outlets. There are very strong apprehensions that the retailers and vendors can mutually bypass or forge the software to under-report the sales at their retail outlets.

A source on strict condition of anonymity said, “Few FBR’s vendors are offering the retailers to install forged software or accurate software with different prices. Retailers have to pay higher prices for software that can cheat the FBR system. A simple button in the machine can do the whole job. The software would simply reduce the reported sales to the FBR’s computerized system. This means that the under-reporting of sales can easily be done in the connivance of the vendor. The fraud came to light when the FBR detected one such case of a vendor who installed software at the retail outlet which was forged to under-report the sales”, he added.

To deal with the situation, the FBR needs to verify the functioning and authenticity of the POS system installed at the retail outlets. There can be cases where the vendor installs software that can show no sales, fewer sales, or conceal total sales.

The FBR needs to place some foolproof mechanism to save its biggest documentation measure, the source added.

Under rule 150ZEB of the Saless Tax Rules, 2006, the registered persons (integrated suppliers) shall install such fiscal electronic device and software, as approved by the Board, available on its website with complete technical instructions for installation, configuration, and integration.

The integrated suppliers shall notify the board, through the computerized system, of all their outlets and the integrated supplier shall register each point of sale to activate the integration.

Source: Pro Pakistani

Exchange companies have been asked to use an android based biometric verification system to maintain the records and verifications of customers on the purchase of Dollars and other foreign currencies above $500 from the open market.

The facility will be available from 5 November onward.

The alternate option of customers’ verification was proposed by the National Database and Registration Authority (NADRA) as the exchange companies have been facing technical challenges.

A notification issued by the State Bank of Pakistan (SBP) detailed that the exchange companies in categories A and B have been advised to deploy BVS as provided by the NADRA at their outlets for the biometric verification of customers after 5 November. However, any relaxations or extensions in the timeline will only be allowed to the companies that approach the banking regulator with genuine reasons and explicit time-bound implementation plans.

The banking regulatory told the exchange companies to contact the NADRA for the resolution of their technical and financial matters in line with the procurement of a device or a system for biometric verification solutions.

Android-based BVS can also be integrated with the core business application of the exchange companies that have been instructed to coordinate with the database authority to ensure that the integrated system is implemented within the stipulated deadline of 30 June 2022.

The SBP had directed the exchange companies to conduct mandatory biometric verification from 22 October for all the foreign currency sale transactions equivalent to $500 and above and outward remittances. The decision for customers screening was taken in accordance with the smuggling or outflow of Dollars to Afghanistan after the change of its regime.

However, the biometric verification requirement could not be implemented because the system to connect with the NADRA was unavailable. Meanwhile, the exchange companies were allowed to sell Dollars with biometric certifications from NADRA’s e-Sahulat franchises until 5 November.

Exchange companies are verifying the genuineness of the system-generated receipts from the NADRA e-Sahulat website and are keeping copies of verifications along with the other required documents.

Source: Pro Pakistani

Sugar prices have skyrocketed as wholesale rates touch Rs. 150 per kilogram and retail rates reach Rs. 160 per kilogram in most areas of the country, with the government unable to control the prices.

Prices have increased as the local sugar supply has declined. The government also identified sugar millers that raised their prices under the pretext of disruption in sugar supply due to TLP protests.

Two major groups are hoarding around 80,000 tons of sugar stock and are rigging the market with the help of sugar dealers, said an official from the Punjab government.

“The Punjab government is caught between a restraining order by the court (preventing lifting stocks of defaulting mills) and realities of the market. It cannot touch the mills’ stocks even if they are behaving like they are. So, these groups are now dictating the market and minting money,” explained the official.

To make things worse, sugar prices are soaring despite importing 300,000 tons of sugar, spending the limited dollar reserves in the country.

Government officials reported that imported sugar is being undersupplied, and provinces are only providing imported sugar in Sasta Bazars. Further, there is a perception that the imported sugar is of poor quality, allowing the local sugar millers to charge higher for their stock — that is more granular and crystal.

The National Price Monitoring Committee (NPMC) will discuss the sugar issue at its next meeting and possibly decide to halt sugar imports for the ongoing year to fulfill local demands, said high-ranking officials from the Ministry of Finance.

Source: Pro Pakistani

The foreign reserves of the State Bank of Pakistan saw an increase of $53 million and surged up to $17.199 billion at the end of last week. However, a decline was seen in Total Liquid Forex Reserves as they moved down to $23.925 billion from $23.933 billion, a decrease of $8 million.

Net reserves with SBP during October decreased drastically. On October 1, the net reserves of SBP were recorded at $19.169 billion whereas, by the end of the month, the net reserves dropped to $17.199 billion. The biggest fall came during the third week of the month as net reserves dropped from $19.138 billion on October 8 to $17.492 billion on October 15.

Consequently, a decline in Total Liquid Forex Reserves was seen during the month. At the beginning of the month, the total liquid forex reserves stood at $25.999 billion, and by the end of the month, the reserves were recorded at $23.925 billion.

Over the past few months, the foreign reserves have depicted an irregular trend. The foreign reserves held by SBP witnessed a massive increase and went from $17.846 billion in July 2021 to $20.074 billion in August 2021. However, by the end of September 2021, the foreign reserves held by the central bank witnessed a dip and settled at $19.253 billion.

Source: Pro Pakistani

Cement sales declined in the first four months of the ongoing fiscal year despite the increase in domestic sales as their exports dropped substantially.

The combined domestic and export sales figures stood at 18.029 million tonnes during July-October FY2022, which is a 6.68 percent drop as compared to the same period last year (19.331 million tonnes) according to data from the All Pakistan Cement Manufacturers Association (APCMA).

The data showed that domestic sales grew by 1.1 percent to 15.882 million tonnes during the first four months of the current fiscal year from 15.713 million tonnes in the same period last year. Overall, the slight increase in sales was affected by a massive drop in the export of cement.

The exports were 2.157 million tonnes during the period from July to October in the ongoing year against 3.617 million tonnes during the same period last year, posting a whopping 40.4 percent drop in the exports.

A monthly analysis shows that sales dropped by 9.01 percent in October in the ongoing year and the sales stood at 5.214 million tonnes as compared to 5.735 million tonnes during the same month in the last fiscal year.

The trend has been attributed to declines in the monthly domestic sales and monthly exports of cement.

The APCMA noted that the cement industry has had a reduction of 5.29 percent in domestic sales. The domestic sales in October 2021 and October 2020 were 4.603 million tonnes and 4.859 million tonnes respectively. Likewise, the exports dropped by 30.09 percent to 611,884 tonnes in October 2021 from 875,266 tonnes in the same month of the previous fiscal year.

Based on the geographical breakdown, the mills in the north sold 3.831 million tonnes of cement in the domestic markets in October 2021, down 8.01 percent from 4.164 million tonnes last October.

The mills in the south sent 771,755 tonnes of cement to local markets in October 2021, posting an increase of 11.01 percent over the 695,221 tonnes shipped in October 2020.

Source: Pro Pakistani

Virtual Remittance Gate (VRG) World has won its legal battle against Digital Bridge as the Sindh High Court (SHC) has allowed it to continue providing services to various clients for the Asaan Mobile Scheme.

Digital Bridge had sued VRG World for not meeting the standard criteria prescribed by the authorities and claimed that it should not be allowed to operate.

Digital Bridge claimed that the authorities had not allowed it to commence its operation although it had fulfilled the requirements besides making handsome investments so that the other operator may gain the advantage in the market in its absence.

VRG World stated that it had also fulfilled all the requirements, including an 11-step process and that it had maintained the paid-up capital of Rs. 200 million as the mandatory regulatory requirement.

On the other hand, Digital Bridge had failed to maintain the prescribed limit of the paid-up capital that was merely Rs. 10 million.

The SHC has allowed VRG World to continue its operations and has dismissed Digital Bridge’s case against it.

The legal battle between the two operators is part of their commercial rivalry that goes back a couple of years to when they were awarded licenses.

The Pakistan Telecommunication Authority (PTA) and the State Bank of Pakistan (SBP) had issued two Third Party Service Provider (TPSP) licenses to VRG (Pvt.) Ltd. and Digital Bridge (Pvt.) Ltd. (DBL) in 2018 to bring the unbanked population into formal banking service.

The telecommunication watchdog had rebuffed VRG last year for running an ill-intended campaign in a section of the media to malign the regulator and influence regulatory decisions.

The PTA claimed that it had fully facilitated the TPSP licensees through a series of meetings and discussions to resolve the technical and financial issues between all the stakeholders over several months. However, instead of recognizing the efforts of the PTA, VRG had tried to malign it by publishing misinformation.

The PTA had then objected in a statement, claiming that VRG had slandered it for favoring Digital Bridge to put pressure on the former well before the 30 days notice for processing of commencement certificate that ended on 4 September 2020.

Source: Pro Pakistani

The Securities and Exchange Commission of Pakistan (SECP) registered 2,017 new companies in October, raising the total number of registered companies to 154,093.

Consequently, the total capitalization (paid-up-capital) of the new companies stood at Rs. 2.7 billion.

Around 99 percent of companies were registered online and 140 overseas users were also registered. The October incorporation consists of 63 percent private limited companies, 33 percent single-member companies, and three percent public unlisted companies, not-for-profit associations, and limited liability partnerships (LLP).

The construction and real estate sector took the lead with the incorporation of 369, trading with 302, and information technology with 270 new companies. These segments were followed closely by the services sector with 173 companies, e-commerce with 98 companies, food and beverages with 76 companies, and education with 67 companies.

The sector-wise details show the textile sector with 52 incorporations; chemical, pharmaceutical, and market and development with 47 incorporations each; corporate agricultural farming with 46 incorporations; engineering with 41 incorporations; transport with 38 incorporations; tourism with 35 incorporations; healthcare with 33 incorporations; auto and allied with 32 incorporations; mining and quarrying with 31 incorporations; logging with 21 incorporations; communication, and power generation with 19 incorporations each; cables and electric goods with 17 incorporations; broadcasting and telecasting, and cosmetics and toiletries with 16 incorporations each; fuel and energy with 15 incorporations; paper and board with 11 incorporations; and 79 companies were registered in other sectors.

Foreign investments were reported in 58 new companies. These companies have foreign investors from Afghanistan, Belgium, China, Denmark, France, Hong Kong, Italy, Japan, Jordan, Kenya, Lebanon, Malta, the Netherlands, the Philippines, Saudi Arabia, Senegal, Singapore, South Africa, Switzerland, Turkey, the UAE, the UK, and the US.

Source: Pro Pakistani