Connect with us

Business

Govt to scrap fixed tax on traders

Published

on



ISLAMABAD:

Buckled under the pressure from its traditional vote bank, the government has agreed to withdraw a fixed Rs100 per day tax through a presidential ordinance that will exclude three-fourths of the total traders from the new tax ambit.

The step will cause a Rs30 billion dent on the national exchequer out of the total expected revenue of Rs42 billion that the Federal Board of Revenue (FBR) had estimated for fiscal year 2022-23 and will also help nearly 1.8 million retailers remain outside of the tax net.

Advertisement

The decision may risk annoying the International Monetary Fund (IMF) that has made broadening of the tax base an important point of the bailout package.

Sources said that the government had decided to promulgate a presidential ordinance to waive the tax on small traders and increase the tax burden on smokers to offset the loss of Rs30 billion.

Through the ordinance, the government may also withdraw the income tax levied on the allowances of Pakistani diplomats posted abroad. Once again, the PML-N led coalition government has let the traders escape the tax net after they won the support of PML-N’ senior party leader, Maryam Nawaz Sharif.

Maryam tweeted on Sunday that she had spoken to Finance Minister Miftah Ismail, who assured her that the solution to traders’ complaints would be found to their complete satisfaction.

As a result, the government decided to withdraw the Rs3,000 per month fixed tax imposed on the retailers consuming up to 150 units of electricity. The formal decision was taken during meetings that Finance Minister Miftah Ismail held with three different groups of traders on the instructions of Maryam Nawaz and Prime Minister Shehbaz Sharif.

Advertisement

However, those retailers that will be exempted from the fixed tax will pay under the old tax regime, which has already proven ineffective to collect due taxes from the wholesalers and retailers that make up 19% of the total economy. In the budget, the government had made a move to tax the small and medium-sized retailers through indirect means. In order to collect Rs42 billion more from 2.3 million commercial electricity connections, the government had slapped fixed tax through their electricity bills. The move will benefit around 1.8 million traders.

The fixed tax regime for the retailers had been rationalized and instead of percentage of the amount of monthly electricity bill, tax was charged on their monthly electricity bills as Rs3,000 for monthly bill up to Rs30,000, Rs5,000 if the monthly bill exceeds Rs30,000 but does not exceed Rs50,000 and Rs10,000 for monthly bill over Rs50,000.

These tax amounts will be doubled if the name of the retailer is not appearing on the Active Taxpayers List (ATL) on the date of issuance of monthly electricity bill.

The decision to exempt up to 150 electricity units consumers from the fixed tax would exclude 75% to 80% of the retailers and will cause around Rs30 billion revenue losses, according to a senior FBR official. The government was in process to further fine tune these numbers.

While talking to The Express Tribune, Finance Minister Miftah Ismail said that those who would not pay fixed tax will again be charged at old 10% withholding tax rates.

Advertisement

The Finance Minister said that the government will promulgate a President Ordinance to exclude the trades having up to 150 units’ monthly electricity consumption from the tax but importantly to introduce additional taxes to compensate any revenue loss.

Miftah Ismail added that the government plans to increase the taxes on both the cigarettes and green leafs (unprocessed tobacco) to increase the taxes. The minister said that the FBR has enhanced monitoring of tobacco factories and these factories now only have one option, either to pay taxes or shut the business.

The Finance Minister added through the same Ordinance the income tax exemption for Pakistani diplomats serving abroad will be restored. The procedural changes will also be made for the pharmaceutical sector. The Finance Minister has assured us that he would withdraw the fixed tax for small retailers but our association has sought a legal cover so that the FBR does not harass us, said Naeem Mir, the senior leader of the All Pakistan Anjuman-e-Tajran.

The government has agreed to exclude about 80% of the traders from the fixed tax and as a result about 500,000 retailers will pay the fixed tax, said Naeem Mir. Mir said that the association also demanded to increase the exemption limit to 300 units monthly consumption. Mir plainly stated that the retailers would not file their income tax returns and the fixed tax will be full and final settlement.

The Finance Minister also directed the FBR on Sunday to prepare another budget proposal to impose Rs30 billion more taxes to offset the impact of Rs30 billion supplementary grant to the Pakistan State oil.

Advertisement

This suggests that about Rs60 billion worth mini-budget is in the offing. The IMF has asked Pakistan to stick to the Rs153 billion primary budget surplus target for this fiscal year and any deviation may cost the country the loan tranche.

Published in The Express Tribune, August 2nd, 2022.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.



Advertisement
Continue Reading
Advertisement
Click to comment

Leave a Reply

Your email address will not be published.

Business

Foreign investors get immunity

Published

on

By



ISLAMABAD:

The cabinet has turned down a proposal of issuing binding instructions regarding commercial transactions with foreign countries and agreed to give immunity to foreign investors by placing a bar on court jurisdictions under the Inter-Governmental Commercial Transactions Act 2022.

Sources told The Express Tribune that cabinet members expressed reservations about Clause 5 of the proposed bill, pertaining to powers of issuing binding instructions.

Advertisement

They observed that the clause was against the spirit of the 18th Amendment to the Constitution and was open to misuse as it undermined the provincial autonomy.

In a recent meeting of the cabinet chaired by Prime Minister Shehbaz Sharif, the minister of law and justice explained that the clause had “limited invocation”, only to the extent of particular transactions to facilitate foreign investors and obviate delays in the execution of projects.

Cabinet members were, however, of the view that sub-clause 2 and word “binding” in Clause 5 should be deleted.

Expressing their views on Clause 8 of the proposed bill regarding bar on the jurisdiction of courts, some cabinet members felt that its insertion was futile as it would not bar superior courts from taking cognisance under their original jurisdiction.

The law minister explained that it was a standard clause present in many other laws, which helped mitigate frivolous litigation.

Advertisement

Furthermore, similar clauses already exist in the Special Economic Zone (SEZ) and Special Technology Zone (STZ) laws. He advocated that its inclusion was necessary to provide protection and comfort to the foreign investors.

While agreeing that the immunity to foreign investors was necessary, the cabinet members felt that Section 8 may be revisited.

The law minister suggested that the observation may be taken up by the National Assembly standing committee, where members of all parliamentary parties had representation, while discussing the proposed legislation, which was agreed.

The cabinet considered a summary titled “Inter-Governmental Commercial Transactions Act 2022”, submitted by the Law and Justice Division.

It approved the proposal with the stipulation that in Clause 5 the word “binding” in marginal heading and expression “(1)” shall be deleted; and sub-clause (2) of Clause 5 shall be deleted.

Advertisement

The Law and Justice Division briefed the cabinet that there was no legislation for authorising, negotiating and supervising inter-governmental agreements between the government of Pakistan and the government of a foreign state for the purpose of entering into business agreements.

As a result, the cabinet in its meeting held on July 4, 2022 constituted a sub-committee to establish a statutory framework for inter-governmental commercial transactions.

The sub-committee prepared a draft ordinance titled “Inter-governmental Commercial Transactions Ordinance 2022” and finalised its report for submission to the cabinet for approval.

The cabinet, in its meeting held on July 15, 2022, considered the report and accorded its approval, in principle, to the draft ordinance.

Later, a summary was introduced by the Cabinet Division for the Cabinet Committee on Legislative Changes (CCLC) and a draft was approved by the CCLC in its meeting on July 20, 2022. Subsequently, it was ratified by the cabinet.

Advertisement

A summary was initiated by the Cabinet Division on July 22 for the promulgation of the draft ordinance but the prime minister directed that instead of promulgation of the ordinance, a bill may be introduced in the National Assembly.

Consequently, the draft ordinance was converted into a bill for its presentation in a National Assembly session.

Under the proposed law, the federal government will constitute a cabinet committee on inter-governmental commercial transactions comprising members of the cabinet. The committee’s primary function will be to authorise negotiations and execution of inter-governmental agreements.

It will allow state-owned enterprises of both countries to form a commercial venture either in Pakistan or in a foreign country. The enactment of the proposed bill is imperative to attract and encourage foreign countries to have economic and business relations with Pakistan.

The Law and Justice Division requested that the vetted and improved draft titled “Inter-governmental Commercial Transactions Act 2022” may be exempt from placing before the CCLC again as its ordinance had already been considered by the forum and may be approved by the federal cabinet in terms of its mandate under Rule 16(a) read with Rule 27 of the Rules of Business 1973.­­

Advertisement

Published in The Express Tribune, August 11th, 2022.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.



Advertisement
Continue Reading

Business

Oil rebounds on renewed gasoline demand

Published

on

By



NEW YORK:

Oil prices rose on Wednesday, rebounding from losses early in the session on lift from encouraging figures on US gasoline demand and as a lower-than-expected US inflation figure drove investors into riskier assets.

Brent crude futures rose 68 cents, or 0.7%, to $96.99 a barrel as of 1746 GMT. US West Texas Intermediate crude futures gained 83 cents, or 0.9%, to $91.33.

Advertisement

US crude oil stocks rose by 5.5 million barrels in the most recent week, the US Energy Information Administration said, more than the expected increase of 73,000 barrels.

However, US gasoline stocks fell sharply as implied demand rose after weeks of lacklustre activity during what is supposed to be peak summer driving season.

“Everyone has been very much focused on potential demand destruction, so seeing implied demand showing an outsized rebound for last week has probably given some comfort to those really concerned about that,” said Matt Smith, lead oil analyst for Americas at Kpler.

Gasoline product supplied rose in the most recent week to 9.1 million bpd, though that figure still shows demand down 6% over the past four weeks compared with the year-ago period.

US oil refiners and pipeline operators expect strong energy consumption for the second half of 2022, a Reuters’ review of company earnings calls showed.

Advertisement

US consumer prices were unchanged in July due to a sharp drop in the cost of gasoline, delivering the first notable sign of relief.

Published in The Express Tribune, August 11th, 2022.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.



Advertisement
Continue Reading

Business

Indian firms swapping dollar for Asian currencies

Published

on

By



NEW DELHI:

Indian companies are using Asian currencies more often to pay for Russian coal imports, according to customs documents and industry sources, avoiding the US dollar and cutting the risk of breaching Western sanctions against Moscow.

Reuters previously reported on a large Indian coal deal involving the Chinese yuan, but the customs data underlines how non-dollar settlements are becoming commonplace.

Advertisement

India has aggressively stepped up purchases of Russian oil and coal since the war in Ukraine began, helping to cushion Moscow from the effects of sanctions and allowing New Delhi to secure raw material at discounts compared to supplies from other countries.

Russia became India’s third-largest coal supplier in July, with imports rising by over a fifth compared with June to a record 2.06 million tonnes. In June, Indian buyers paid for at least 742,000 tonnes using currencies other than the US dollar, according to a summary of deals compiled by a trade source based in India using customs documents and shared with Reuters, equal to 44% of the 1.7 million tonnes of Russian imports that month.

Indian steelmakers and cement manufacturers have bought Russian coal using the United Arab Emirates dirham, Hong Kong dollar, yuan and euro in recent weeks, according to the customs documents separately reviewed by Reuters.

The yuan accounted for 31% of the non-US dollar payments for Russian coal in June and the Hong Kong dollar for 28%. The euro made up under a quarter and the Emirati dirham around one-sixth, the data from the trade source showed.

India’s Ministry of Finance, which administers the customs board, did not respond to emails seeking comment confirming the documents. The Ministry of Commerce and Industry declined to comment.

Advertisement

Published in The Express Tribune, August 11th, 2022.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.



Advertisement
Continue Reading
Advertisement

Trending

Copyright © 2012 Pakistan-sports.com.