Islamabad Chamber of Small Traders on Thursday said complicated tax system is not only discouraging investment but it is also discouraging compliance, therefore, it should be made friendly.
Income tax law is not only discouraging start-ups but it has failed to deliver therefore it should be replaced or amended to make it easily comprehensible, business-friendly, fair and acceptable to all the stakeholders, it said.
The time-tested, well-settled and easily understandable Income Tax Ordinance, 1979, was replaced by a complex law designed by a foreign expert who was not well aware of the ground realities, said Patron Islamabad Chamber of Small Traders Shahid Rasheed Butt.
The new set of laws enforced on the directives of IMF invited criticism from concerned quarters before promulgation as it was not designed to serve the purpose of the state but lenders, he added.
Shahid Rasheed Butt said that the IMF experts changed the basic scheme of the law and brought in inexplicable terminologies. Since then it has been amended for hundreds of times but it remains inconsistent and uninterruptable.
Many tax practitioners, as well as the majority of the FBR officials, find it difficult to understand it which are a reason behind low revenue collection and malpractices.
He said that government should try to introduce new, friendly and clear income tax laws which should not be against the established principles of taxation, irrational, illogical, based on assumptions, self-contradictory or full of blunders.
July 2, 2022: The Federal Board of Revenue (FBR) on Saturday clarified about enhanced rate of Federal Excise Duty (FED) on international air ticket.
The Federal Board of Revenue(FBR) has stated that Federal Excise Duty is chargeable on Club, Business and First class international air tickets under Section 3 of the Federal Excise Act, 2005, said a press release issued.
Furthermore, sub-rule(8) of the rule 41A stipulates that FED is chargeable at the time of issuance of air tickets.
Thus, the enhanced rate of FED on air tickets under the new finance bill 2022 will be chargeable only on international tickets(Club, Business & First class) issued on and after 1st July, 2022.
FBR has further clarified that as federal excise duty is chargeable at the time of issuance of air tickets,therefore,the enhanced rate of federal excise duty at Rs.50,000 (previously Rs.10,000) is not applicable on the Club, Business & First class international air tickets already issued before 1st July,2022.
Pakistan Ambassador to the United States Masood Khan has said that Pakistan’s year-on-year exports to the US have increased by 23% and last year, the total volume of exports, for the first time, crossed $5 billion.
During this financial year, exports have already grown to $6.16 billion in the July-May 2021-22 period.
The figures of June, which have yet to come, he said, would further enhance the overall volume of total Pakistan’s exports to the US.
“The United States is an important trading partner and the single largest export destination for Pakistan. The spurt in our exports is a very promising trend”, a press release from Washington on Saturday quoted ambassador Masood Khan as saying.
He said Pakistan’s total exports to the US in the sectors of services and IT crossed the $2 billion mark. Cumulatively, the total volume of exports should be more than $8 billion, including services and IT.
“Pakistan’s tech sector, supported mainly by the United States’ entrepreneurs, has shown extraordinary results. It is poised to continue on its positive trajectory”, he added.
In recent months, the tech startups in Pakistan had invested and earned half a billion dollars. The digital enterprises in Pakistan were fast becoming global, ready for exponential growth.
“The Pak-US partnership in the tech sector will grow in strength in the years to come”, Masood Khan said.
He said, in the last financial year, Pakistan’s imports from the United States stood at $2.4 billion. In the July-May 2021-22 period, these have increased to $2.72 billion. So, imports from the United States increased marginally whereas there had been a huge rise in Pak’s exports.
In the recent past, the ambassador said, Pakistan has emphasized closer trade and investment ties between Pakistan and the United States. The remarkable performance of Pakistan’s exports to the US market would reinforce such trends and deepen the engagement between the two countries.
Pakistan and the United States held an inter-sessional meeting on trade and investment in March 2022, which was led by Christopher Wilson, Assistant US Trade Representative, from the US side, and Secretary Commerce Muhammad Sualeh Ahmad Faruqui, from the Pakistani side. Both sides are preparing for a Ministerial meeting under Trade and Investment Framework (TIFA) during summer or early fall this year.
July 02, 2022 (MLN): FY22 proved to be a tumultuous year for Pakistan’s stock market as the benchmark KSE-100 index posted a negative return of 12.3%, which was the lowest after FY19 when the index delivered a return of -19%.
While on the back of hefty PKR depreciation of Rs47.30 or 23.09% YoY during FY22, the dollar-adjusted return clocked in at -32.54%, making the KSE-100 index one of the worst-performing indices in the region.
To recall, last year, the bourse had an upward move of 37.6% (46% in USD terms), the highest after FY14.
Reviewing the year-long pattern shows that tough political and economic conditions since the start of FY22 with the change of political set-up during the month of April’22 along with external financing issues due to freezing of the IMF program amid elevated commodity prices brought uncertainty to the market. In addition, the transition from the Emerging Market to a Frontier Market also put pressure on the bourse.
Adding to the woes, foreign exchange reserves started depleting, with the Pak Rupee losing significant ground against the USD and touching an all-time low of 211 per USD in Jun’22. Moreover, concerns over the inflation outlook pushed SBP to resume stern monetary tightening this year as the current policy rate of 13.75% is the highest since Jun’11. As a result, the bourse had a downward move over the year, it touched a peak of 47,356, with a low of 40,555, and closed at 41,541 points level, making the total change for the year at a loss of 5,815 points.
A closer look reveals that the last month of FY22 has been the most difficult month for the Pakistan stock market. Although Pakistan is edging closer to the IMF program, investors’ sentiments remained low due to persistent current account deficit, higher inflation figures and the government’s attempt to broaden the tax net in the FY23 budget in order to comply with IMF requirements. To note, the new corporate taxation measures affect nearly 13 sectors in the listed space, representing 80% market capitalization of the KSE100 Index. Subsequently, the KSE-100 index lost 3.6% or 1,537 points, with turnover thinning out even further.
Sector-wise analysis reveals that the major downside to the benchmark KSE-100 index came from Cement with 2,359 points followed by Technology and Banks with 946 points and 506 points respectively. In particular, the scrips of LUCK (-1,113 pts), TRG (-1,014 pts), HBL (-423 pts), DGKC (-286 pts), and UNITY (-269 pts) turned out to be the most disappointing ones.
On the other hand, Fertilizer, Chemical, Miscellaneous, Automobile and Real Estate emerged as the best-performing sectors during FY22, as they added around 778, 501, 290, 180, and 52 points respectively to the benchmark index. To be specific, the scrips of EFERT (528 pts), EPCL (407 pts), MTL (368 pts), FFC (320 pts), and PSEL (318 pts) turned out to be the most pleasing ones.
Meanwhile, the All-Share Market Cap decreased by nearly Rs1.34 trillion, i.e., 16.16% lower than FY21.
Flow-wise, foreigners have continued on their selling spree, offloading $297.5mn worth of equities during the year compared to $387.34mn which was the highest since FY17.
On the other end of the spectrum, Individuals, companies, and Banks remained the aggressive buyers as they purchased $157.2mn, $115.2mn, and $111mn worth of equities, respectively. However, Mutual Funds and Brokers reduced their exposure by around $128.2mn, and $20mn, respectively. Insurance Companies too reduced their exposure by around $1.15mn during FY22.
Outlook:
The removal of cash subsidy, imposition of a levy on petroleum products and increase in budget revenue targets has increased the probability of resumption of the IMF program which will rebuild investors’ confidence and provide much-needed certainty to the capital market in the coming months.
Moreover, the current account deficit is also expected to narrow down in FY23 due to economic slowdown and measures taken by the government to curb imports of non-essential items, providing respite to the market.
Another key area of respite could emerge from softening global commodity prices over inflation suppressing global demand.
Jul 01, 2022: Minister of State for Energy Mohammad Hashim Notezai on Friday said that additional 5,000 megawatts electricity would be added in the system by March 2023.
Addressing the people during an open katcheri at Circuit House Khuzdar, the minister deplored that due to unavailability of fuel, 5739 MW capacity is cut off, with fuel’s availability, this will start working and will be added into the main grid.
“Due to increasing heat energy crisis has intensified in the country", he said and gave credit to the incumbent government for its timely measures and making 3,000 MW available to the public.
The minister apprised that the government has inked an agreement with Iran for supplying 100 MW power to Makran division in Balochistan.
He appealed to the customers to submit their bills on time and cooperate with the QESCO for uninterrupted supply of electricity.
Deputy Commissioner Khuzdar Major retired Muhammad Ilyas Kabzai, SSP Javed Iqbal Gharshin and Assistant Commissioner Jahanzeb Shahwani, were also present.
.jpeg)
