Day: December 31, 2021

Chairman Federal Board of Revenue (FBR), Dr. Muhammad Ashfaq Ahmed, said on Friday that certain media reports misinterpreted various tax issues as many taxes which were reportedly imposed were in fact not levied.

Addressing a press conference, the Chairman FBR said the International Monetary Fund (IMF) was though a reality, many taxes claimed by media were not applied, adding that some taxes shifted from one place to another were also twisted in reports.

Dr. Ashfaq Ahmed pointed out that some changes were being made regarding tax laws through the Finance (Supplementary) Bill, 2021.

The tax reforms, he said, should have been made long ago. Nonetheless, in the previous regimes, tax exemptions were granted to specific interest groups instead of bringing a change in the tax laws.

He observed that the previous governments applied the taxes suggested by IMF, however, they left the tax exemptions on certain economic groups intact. This made the previous governments popular among such interest groups and it was done as it was right for their political interests, he added.

He mentioned that IMF always suggested and demanded tax reforms as it was the only way to move the economy to a sustainable position.

Source: Pro Pakistani

Afghanistan Revenue Department (ARD) and Federal Board of Revenue (FBR) concluded the second round of negotiations on the Double Taxation Agreement (DTA) between Pakistan and Afghanistan.

The four-member delegation of the Afghanistan Revenue Department (ARD) was on a visit to Pakistan, which commenced on 27th December 2021.

The inaugural session was presided over by Qaiser Iqbal, Director General (International Taxes), FBR, who welcomed the delegates and hoped that the proposed DTA between the two brotherly countries would go a long way in fostering economic relationships and would also contribute to the development of both the countries.

The negotiations were conducted in the most cordial and friendly atmosphere. Both the delegations discussed all the outstanding issues of the first round of negotiations held in Islamabad from 28th to 30th March 2016. Both sides presented and appreciated each other’s respective positions. However, it was agreed that the unresolved issues would be discussed and finalized in the third round of negotiations to be held in Kabul, Afghanistan on mutually agreed dates.

The Afghan delegation was led by Esmatullah Salimi, Revenue Audit Director, ARD, and included Abdul Wali Noori, Technical Deputy Director-General, ARD, Nida Mohammad Seddiqi, Legal Services Director, ARD, and Najeebullah Ahmadzai, Advisor to MoF.

The Pakistan delegation was headed by Qaiser Iqbal, Director General (International Taxes), FBR, and included Barrister Nowsherwan Khan, Chief (International Taxes), and Hira Nazir, Secretary (Tax Treaties & Conventions), FBR.

Source: Pro Pakistani

More than two-thirds of the $1.7 billion increase in textile exports from July to November 2021 is due to an increase in global prices. In other words, had international prices remained the same from last year, the dollar value of textile exports would have only climbed by 7.8 percent.

The Economic Advisory Group (EAG), in its report titled ‘New Vision for Economic Transformation’, has asserted that the rise in textile exports during the first half of the fiscal year 2022 rose due to high international prices and currency devaluation.

Overall, EAG analyzed the factors that drove the increase in exports in recent years. The report findings reveal that variations in the actual effective exchange rate explain the majority of the slowdown in export volume between 2015 and 2018 and the subsequent growth since 2018.

Changes in global economic conditions have also had an impact on the volume of exports. For example, during COVID-19, a reduction in global economic activity resulted in a 25 percent drop in exports compared to the trend (blue bars below). However, since then, the global economic recovery has had a beneficial impact on Pakistan’s export performance throughout most of the financial year.

The favorable exchange rate regime, in particular, not only reversed the detrimental effects of exorbitant exchange rates between 2015 and 2018 but also aided in further stimulating them by roughly 5-10 percent relative to the trend.

The data also highlights the favorable exchange rates and the world demand account, with government subsidies having a negligible or minor impact on export volumes. These findings cast doubt on the value of government subsidies to industries in order to enhance exports.

In light of these findings, the Group urges the government to reconsider the incentives it has provided to these industries. It also stresses the need for the government to review its sectoral policies with the goal of rewarding innovators, improving land use within cities, negotiating market access to international markets, mainstreaming vocational training, and simplifying the tax code rather than picking winners.

Source: Pro Pakistani

The Economic Coordination Committee (ECC) of the cabinet on Friday approved the re-rolling of a $142 million loan for Roosevelt Hotel, New York.

Finance Minister Shaukat Tarin presided over the meeting, which discussed a number of summaries, including the Aviation Division’s summary seeking approval for extending the date of the National Bank of Pakistan loan for expenditures and to pay the salaries of the employees of Roosevelt Hotel.

According to the summary obtained by ProPakistani, the principal amount of the loan of $141 million and payment of $35.5 million in four quarterly installments was to take effect from December 31, 2021. However, the Pakistan International Airlines Corporation Limited (PIACL) informed ECC of its inability to pay up the principal amount of the loan, markup, and dues payable on behalf of Roosevelt Hotel Corporation (RHC). The summary of the PIACL sought an extension of two years for clearance of the principal amount and the markup incurred. The committee discussed and approved the proposal with directions to Aviation Division to prepare a roadmap for the permanent solution of the issue.

ECC discussed and approved a summary tabled by the Cabinet Division on proposals of Naya Pakistan Housing and Development Authority (NAPHDA) for revision of customer pricing and mark-up subsidy period under Tier-I of Government mark-up subsidy scheme for low-cost housing (for NAPHDA projects) and inclusion of Housing Finance Companies (HFCs) in G-MSS for housing finance with directions that there should be no direct involvement by the commercial banks in NAPHDA projects.

ECC also approved a summary submitted by the Ministry of Communication for extension in the timeline given to the National Highways Authority for preparation of commercially viable business plan till June 2022. NHA’s debt restructuring would be linked with the outcome of the business plan. ECC directed the Ministry of Communication to submit a monthly progress report regularly and prepare Business Plan well before the deadline.

The committee also gave assent to the proposal of the Ministry of Communication seeking a special allocation of additional funds of Rs. 8,000 million (Rs. 4000 million as upfront Viability Gap Funding (VGF) and Rs. 4000 million for overhead costs) against approved government’s share for the PSDP project, “Sialkot (Sambrial)-Kharian Motorway Project (SKMP)”.

The Finance Division tabled a summary on the proposal of the State Bank of Pakistan (SBP) for incentives for exchange companies against the surrender of foreign exchange in the interbank market. Under the proposal, exchange companies may be provided cash incentives of Rs. 1 against surrender of each dollar mobilized from inward remittances. Exchange companies are required to surrender 100 percent of inward remittances in the interbank market. The ECC approved the proposal with direction to review the model to achieve further improvement.

The committee discussed and approved the summary tabled by the Ministry of Industries and Production regarding gas rate for operations of Sui Northern Gas Pipelines Limited (SNGPL) based plants i.e. Fatima Fertilizer (Sheikhupura plant) and Agri-tech for the period October 2021 to January 2022, and to keep at PKR 839/MMBTU (with variable contribution margin @186/bag).

The meeting also approved a summary submitted by the National Engineering and Scientific Commission for issuance of the government’s sovereign guarantee for the National Electronics Complex of Pakistan (NECOP) project worth $5.82 million for batch-IV and $26.15 million for batch –V in favor of CETC, Beijing, China to pay back the loan in seven years, including two years grace time.

The Petroleum Division, Ministry of Energy, submitted a summary for issuance of sovereign guarantee amounting to Rs. 24.19 billion in favor of M/s Habib Metropolitan Bank Ltd and a syndicate of two banks led by United Bank Limited (UBL) for the remaining tenor of the loan and letter of comfort in favor of lender banks for new financing agreement with respect to pipeline infrastructure development project LNG-II. The Economic Coordination Committee approved the proposal.

ECC considered and approved the summary submitted by the Ministry of Maritime Affairs for grant of relaxation to Pakistan National Shipping Corporation (PNSC)’s 19 subsidiary companies from the applicability of the Public Sector Companies (Corporate Governance Rules).

The committee approved, in principle, a summary tabled by the Ministry of Economic Affairs on Global Transition from LIBOR to Alternate reference rates with directions that reference rates to be adopted in the future may be submitted to ECC for approval.

The meeting discussed in detail the summary presented by the Ministry of Industries and Production for price revision of non-subsidized goods and continuation of untargeted subsidy after December 31, 2021. After deliberation, the ECC allowed the Ministry of Industries and Production the continuation of subsidy on the five essential commodities for only the month of January.

ECC approved Technical Supplementary Grant worth Rs. 90 million for 1.2 MGD reverse Osmosis desalination (ROD) Plant at Gwadar (Chinese Grant).

The committee also approved TSG worth Rs. 14.621 million for purchase of spare parts for helicopter maintained by Pakistan Rangers Sindh.

The meeting also approved TSG for the release of funds Rs. 431.880 million to project implementation letter of HQ Frontier Corps (South) KP, Dera Ismail Khan funded by Bureau of International Narcotics & Law Enforcement – Pakistan (INL-P).

The committee approved TSG worth Rs. 751.486 million in favor of Ministry of Energy, Power Division, out of development expenditure of Ministry of Planning, Development & Special Initiatives.

On a summary for provision of funds for life-saving drugs to Afghan people, presented by Ministry of National Health Services, Regulations & Coordination, the Committee advised the Ministry of National Health Services, Regulations & Coordination to review its budget and demand be met by re-appropriation of funds within the budget.

Federal Minister for National Food Security and Research Syed Fakhar Imam, Federal Minister for Planning, Development and Special Initiatives Asad Umar, Federal Minister for Industries and Production Makhdum Khusro Bakhtyar, Federal Minister for Energy Hammad Azhar, Federal Minister for Privatization Muhammad Mian Soomro, Federal Minister for Railways Muhammad Azam Khan Swati, Federal Minister for Maritime Affairs Syed Ali Haider Zaidi and federal secretaries attended the meeting.

Source: Pro Pakistani

Asian Development Bank (ADB) and Pakistan achieved a historic high level of cooperation with over $2.3 billion committed by the Bank in 2021, said ADB Country Director for Pakistan Yong Ye.

The Country Director in a video message stated, “as we continue to work together to confront the pandemic, we are happy to update you that ADB and Pakistan achieved a record high level of cooperation with ADB committing $2.3 billion in 2021 – reflecting our enduring partnership despite the challenge posed by Covid-19 pandemic”.

He further stated that Pakistan continues to make impressive progress and carried out robust economic, fiscal and structural reforms, ADB guided by its new country partnership strategy looks forward to deepening its support for Pakistan.

The bank will continue its support for Pakistan in pandemic through vaccination, social protection, public sector management, climate resilience, competitiveness and private sector development, he added.

Source: Pro Pakistani

The Federal Board of Revenue (FBR) collected net revenue of Rs. 2,920 billion during July-December of the current financial year 2021-22, exceeding the target of Rs. 2,633 billion by Rs. 287 billion.

According to the FBR provisional revenue collection figures for the first half of the current financial year, the revenue collection represents a growth of about 32.5 percent over the collection of Rs. 2,204 billion during the same period last year.

The net collection for the month of December 2021 realized Rs. 600 billion, representing an increase of 18.0 percent over Rs. 509 billion collected in December 2020. These figures are likely to further improve before the close of the day and after book adjustments have been taken into account.

On the other hand, the gross collections increased from Rs. 2,315 billion during July-December 2020 to Rs. 3,068 billion in the current financial year during July-December, 2021, showing an increase of 32.5 percent.

Likewise, the number of refunds disbursed was Rs. 148 billion during July-December 2021 compared to Rs. 111 billion paid last year, showing an increase of 33.0 percent.

Source: Pro Pakistani