Day: December 30, 2021

Federal Minister for Finance and Revenue, Shaukat Tarin, has ruled out the speculations, being expressed by many, that the supplementary finance bill will cause an increase in inflation.

Addressing a press conference, jointly with Minister of State for Information and Broadcasting, Farrukh Habib, Tarin said the government had proposed to withdraw tax exemptions of Rs. 343 billion out of which Rs. 272 billion taxes were refundable or adjustable.

The minister said that proposed new taxes only amounted to Rs. 71 billion, out of which Rs. 69 billion taxes were on luxury imported items such as imported fish, high-end bakery items, imported cheese, and imported bicycles.

“We have proposed removal of only Rs. 2 billion tax exemptions on the items that can be related to the common man which would have a negligible impact on inflation,” the minister said.

“The International Monetary Fund (IMF) had asked us to impose Rs. 700 billion in new taxes but we negotiated and brought it down to just Rs. 343 billion,” he explained.

Giving a breakdown of the tax exemptions being withdrawn, the minister said the Rs. 112 billion tax exemptions on machinery and Rs. 160 billion tax exemptions on the pharmaceutical sector would be refundable or adjustable.

SBP Autonomy

Commenting on the State Bank of Pakistan (SBP) Amendment Bill 2021, the minister said it was aimed at strengthening the central bank. He added that strengthening the institutions was also included in the manifesto of his party.

Tarin said under the bill, the central bank would be given administration independence, which would provide it the authority to decide administrative measures.

He pointed out that members of the central bank board would be nominated and approved by the government. The board, he said, would be answerable to the relevant standing committees of the Parliament.

He rejected the notion that the bill was akin to selling the country’s sovereignty.

Source: Pro Pakistani

Federal Minister for Finance and Revenue Shaukat Tarin has stated that the incumbent government has laid the foundation of a welfare state to ensure the poor do not suffer anymore and have opportunities to earn a respectable livelihood.

The Minister was addressing a ceremony held to mark the start of the disbursement of interest-free loans under the Kamyab Pakistan Program (KPP). “The foundation of the welfare state has been laid. This is a big day, big day for the poor,” he remarked.

He said that initially four million households would be provided financial assistance under the program, and it would gradually be extended to six million and then seven million households.

He asserted that the program would bring prosperity across the country. He said when the low-income segment of society would become prosperous, it could be said that real Pakistan or Pakistan of Quaid-e-Azam was established.

He said that Prime Minister Imran Khan believed in Riyasat-e-Madina, so he had equal focus on a growing economy and on enhancing the income of the upper and middle classes and the welfare of the poor.

He said the Prime Minister wanted the poor to get opportunities under this program and earn respectable livelihoods for themselves without hurting their self-respect. The major banks, he said, would give wholesale loans to small and microfinance banks that would provide loans to the deserving people on a retail basis.

He maintained that under the program, farmers would be provided interest-free loans up to Rs. 150,000 for one crop and Rs. 300,000 for two crops and Rs. 200,000 for tractors. Rs. 500,000 loans would be provided to households for setting up a business and Rs. 2-2.5 million for building a house. In addition, Sehat cards were provided to ensure health coverage for the poor.

He said this was a complete package to target the poor of the country, adding that loans were being provided purely on a merit basis with complete transparency. He also appreciated all the stakeholders including small and large banks for making this program successful.

The Minister said even the World Bank (WB) was suspicious of how this could happen, but WB conveyed that it would take guidance from Pakistan to replicate the program in other countries.

Speaking on the occasion, Chairman Akhuwat Islamic Microfinance (AIM) Dr. Amjad Saqib said there was no such scheme in Asia that provides an interest-free loan to low-income people.

He said AIM, as per the vision of PM Imran Khan, started loan disbursements in three categories of KPP, including Kamyab Pakistan Low-Cost Housing, Kamyab Pakistan Enterprise Loan, and Kamyab Pakistan Kissan Loan. He said Akhuwat Islamic Microfinance had disbursed 2600 loans amounting to Rs. 400 million so far.

During the ceremony, the Akhuwat Islamic Microfinance disbursed 415 loans worth Rs. 60 million, whereas under the program 600 loans worth Rs. 90 million were distributed across Pakistan on December 30, 2021.

Senator Faisal Javed Khan and HBL Islamic Head Afaq Ahmed Khan were also present during the ceremony.

Source: Pro Pakistani

A Special Cabinet meeting was convened on 30 December 2021 to discuss and approve the Finance (Supplementary) Bill, 2021. Chairman Federal Board of Revenue (FBR) explained the salient features of the Bill. In his presentation, he emphasized the importance of General Sales Tax(GST) reforms.

The Chairman apprised the Cabinet that IMF had demanded Rs. 700 billion of tax and imposition of 17 percent GST across the board. However, Team FBR managed to negotiate tax exemptions worth Rs. 343 billion and defended the productive and marginalized sectors of society.

While explaining the salient features of the proposed Finance Supplementary Bill, 2021, he clarified that commodities of daily use by the common man like food items, dairy products, clothing were being kept tax-free in the domestic market. Similarly, import/supply of rice, wheat, meslin, local supply of other grains, fruits, vegetables, beef, mutton, poultry, fish, eggs, sugar cane, beet sugar, and imported vegetable and fruits from Afghanistan are also retained as tax-free. Moreover, milk and fat-filled milk have also been kept tax-free.

Chairman FBR further elaborated in his presentation to the Cabinet that various items, which might somehow attract adverse impact of tax reforms, have been identified for targeted subsidy. He added that input adjustment shall remain available to all taxable business inputs and assured expeditious sales tax refunds to business and industry on import of raw material and capital goods, including the pharmaceutical sector.

He further explained that pharmaceutical firms have been equated with exporters for purposes of the release of refunds within 72 hours. Therefore, pharma firms will now be able to claim refunds on GST paid as input tax on packaging material, utilities, etc., which they previously could not – having a price tag of Rs. 35 billion. Expectedly, the prices of medicines in the retail market should come down, approximately by 20 percent.

He highlighted the breakup of total withdrawn tax exemptions of Rs. 343 billion and said they can be broken into three main segments. These segments are Pharmaceutical with Rs. 160 billion, Plant and Machinery, Rs.112 billion, and goods, Rs. 71 billion. It was clarified that Rs. 272 billion of the above tax expenditure on account of machinery and pharma is refundable/adjustable.

Only Rs. 71 billion tax exemptions on goods is the net imposed tax and this tax includes a tax on luxury goods of Rs. 31 billion and Rs. 31 billion on business goods. Only a meager amount of Rs. 2 billion is related to goods, which may affect the common man for an elaborate targeted subsidy plan of Rs. 33 billion, which has been proposed to protect any segment of the population that may get affected indirectly by the withdrawal of some exemptions etc.

He further clarified that FED on imported and locally manufactured/assembled vehicles is proposed to be increased on the recommendation of the Tariff Policy Board and Ministry of Commerce. Advance tax on cellular services Is proposed to be increased from 10 percent to 15 percent while Withholding Taxes are proposed on foreign-produced TV serial/dramas and advertisements with foreign actors. Tax on transfer of newly purchased vehicles has been increased to discourage on-money. Exemptions available to REIT have been extended to special purpose vehicles set up under a REIT.

It is pertinent to mention that various issues, including the pharmaceutical sector, plant & machinery, came under discussion in the Cabinet meeting. The Cabinet members raised their concerns about the inflationary impact of the withdrawal of GST exemptions.

Finance Minister explained the dynamics of these withdrawals and assured the cabinet that the inflationary impact would be minimal, and further added that due to adjustment of inputs on account of utilities and packaging material, etc., the prices of pharmaceutical products will come down. Similarly, adjustment/refund is available on any input paid on plant and machinery, he added.

A question was also raised regarding the increase in advance tax on cellular services. Finance Minister explained that this increase was necessary to cover the revenue loss due to the loss of FE on mobile phone calls that was enacted in the Finance Act, 2021.

Source: Pro Pakistani

The Governments of Pakistan and China held virtual meetings of the two Joint Working Groups on Gwadar and Socio-Economic Development to review the implementation status of the China-Pakistan Economic Corridor (CPEC) projects and deliberate on the potential new projects to enhance cooperation.

The 6th Session of the Joint Working Group on Gwadar was co-chaired by Secretary Planning Development & Special Initiatives, Abdul Aziz Uqaili, and Director General National Development & Reforms Commission of China, Ying Xiong.

Secretary Economic Affairs and Maritime Affairs, representatives of Ministries of Foreign Affairs, Aviation, and Defense, and Government of Balochistan along with officials from CPEC Authority, Private Power & Infrastructure Board, Gwadar Port Authority, Gwadar Development Authority as well as representatives of their counterparts in China participated in the meeting.

The meeting reviewed the implementation status of the CPEC projects in Gwadar and deliberated on the future course of action with regard to the development of Gwadar city, port, and the free zone. Both sides expressed satisfaction with the steady progress made on various projects, including full operationalization of Gwadar Port and its inclusion in the Afghan Transit Trade route; finalization of the Smart Port City Master Plan; completion of the Pak-China Technical & Vocational Institute; substantial progress on Eastbay Expressway; commencement of work on New Gwadar International Airport and the Pak-China Friendship Hospital.

It was noted that Gwadar Free Zone Phase-1 had been successfully completed, while work on the much larger Phase-2 covering an area of 2221 acres had been started. The meeting emphasized the need for finalizing the Marketing and Investment Plan for Free Zone along with its implementation strategy.

The meeting was informed that the plan would soon be submitted for consideration by the Cabinet Committee on CPEC.

Chinese enterprises, including Zhejiang DRC, China Communication Construction Company, Zhejiang Seaport, and Huazhang Technology made presentations during the meeting on their planned investments in Low Carbon Recycling Park, within the Gwadar Free Zone. Pakistan side assured the investors of full support and cooperation for their ventures.

It was noted that despite COVID-19 and the resulting travel restrictions, the projects in Gwadar were implemented at a steady pace. The meeting also took note of various operational issues faced by the projects during the course of the year. It was noted that several issues had been resolved through the intervention of relevant authorities. Both sides resolved to address any remaining issues on priority.

The meeting was also informed that the Government of Pakistan was actively implementing various projects to ensure the provision of all the necessary facilities in Gwadar. The projects include linking Gwadar to the national electricity grid; provision of water to Gwadar city from nearby dams; establishment of the University of Gwadar and Gwadar Safe City project and certain other projects in the socio-economic domain.

The two sides resolved to enhance the efforts to tap the full potential of Gwadar port and free zone as well as to ensure that the local population of Gwadar and surrounding areas fully benefit from these projects.

3rd Joint Working Group Meeting of Socio-Economic Development under CPEC

The 3rd meeting of the Joint Working Group on Socio-Economic Development under CPEC was held under the co-chairmanship of Secretary Planning, Development & Special Initiatives, Abdul Aziz Uqaili, and Chairman China International Development Cooperation Agency (CIDCA), Deng Boqing. It reviewed the progress of current projects and deliberated on potential new projects to enhance cooperation in the Socio-Economic Development under CPEC.

The Group was established in November 2018 under the CPEC framework to ensure that economic dividends of CPEC projects reach the less developed areas and peoples’ livelihood is improved.

Both sides expressed satisfaction with the steady progress of the 1st Batch (17 Fast Track) projects and 2nd Batch (10 Priority) projects despite the COVID-19 pandemic. The Convenor (Pakistani side) thanked the government and people of China for their generous support to Pakistan for tackling the COVID-19 pandemic, especially the timely supply of vaccines. He also thanked the Chinese counterparts for their support and assistance to the Government of Pakistan for socio-economic development.

The Chairman CIDCA reiterated China’s strong support for the people and Government of Pakistan and stated that the two iron brothers always helped and supported each other. He recalled Pakistan’s support to China in the early phase of the pandemic and stated that such help was highly valued.

Pakistani side shared the proposed 3rd Batch of projects for consideration of Chinese counterparts. The projects were finalized after due consultations with stakeholders including all provinces, AJK, and Gilgit-Baltistan. It was decided to further enhance bilateral cooperation and implementation mechanism by constituting sub-committees at the working level on both sides.

The meeting was attended by representatives of federal ministries and the representatives of all the provincial governments, AJK and Gilgit-Baltistan, and 11 relevant departments of the Government of China. The Embassies of the two countries also joined the meeting.

Source: Pro Pakistani