ICCI seeks govt support for visits of trade teams to Africa
Islamabad Chamber of Commerce and Industry (ICCI) President Sheikh Amir Waheed has said that the government should sponsor trade delegations to the African region in an effort to explore new avenues of commerce with the continent.
Fifty-four African countries were a market of over 1 billion people with huge potential for Pakistan to promote trade and exports, said Waheed while addressing the “Look Africa” trade forum.
The ICCI, in collaboration with the Trade Development Authority of Pakistan (TDAP) and Ministry of Commerce, organised the trade forum that was aimed at exploring new avenues of trade and exports to African countries.
Waheed pointed out that the total trade volume of Africa was around $1 trillion, but Pakistan’s trade with it stood at only $3 billion.
The government should provide incentives to the private sector for organising exhibitions in African countries to introduce more Pakistani products in the region, he said, adding Pakistan had resident missions in only 15 African countries and it should open missions in all major African countries that would help in improving trade and economic relations.
Ministry of Commerce Joint Secretary Maria Kazi said special incentives would be provided for Pakistani companies through the new strategic trade policy framework for participating in trade fairs in Africa.
TDAP Director Khalid Rasul said the government had planned to increase bilateral trade with Africa from existing $3 billion to $5 billion over the next five years.
Pak to hold single-country exhibition in Dubai
Pakistan will organise a single-country exhibition in the United Arab Emirates (UAE) in September 2018 under the umbrella of Federation of Pakistan Chambers of Commerce and Industry (FPCCI) to showcase its products.
The decision was taken in a meeting between Pakistan Ambassador to UAE Moazzam Ahmed and FPCCI Vice President Waheed Ahmed in the presence of Pakistan Overseas Foundation Executive Council member Dr Muhammad Farhan.
A delegation of Pakistanis based in the UAE as well as investors will also visit Pakistan under the auspices of the Pakistan Overseas Foundation so that trade and investment between the two countries can be further enhanced.
“UAE is a big market for Pakistani fruits, vegetables, meat and poultry products as well as other foodstuff and these products can be re-exported via Dubai to other Gulf countries through land routes.
A ban imposed by the UAE on import of poultry products from Pakistan had also been withdrawn, which would provide further opportunities to enhance exports, the ambassador added.
The FPCCI vice president called the UAE a big market for Pakistani mangoes and kinnows. In collaboration with the Pakistan embassy, he said, an aggressive marketing campaign would be launched to promote Pakistani mangoes in the forthcoming mango season.
Speaking on the occasion, the executive council member of the Pakistan Overseas Foundation said a delegation comprising Pakistani and UAE investors would visit Pakistan to avail themselves of the opportunities of trade and investment available in the country. They will also review the opportunities arising in the wake of China-Pakistan Economic Corridor (CPEC) projects.
Pakistan aligns rules with oecd to curb tax evasion
Pakistan has aligned its legal framework with the Organization for Economic Cooperation and Development (OECD) in order to curb tax avoidance by multinational companies (MNCs) through shifting profits to tax-havens and claiming higher expenditures.
The Federal Board of Revenue (FBR) has recently made new amendments to the Income Tax Rules 2002, making them compatible with requirements of the OECD. The amendments follow a new legal provision that the federal government had added to the 2017-18 budget in May last year.
The government has also given some relaxation to the companies where the requirements were more stringent. By amending Rule 27G of the Income Tax Rules 2002, the FBR has withdrawn the condition of filing country-by-country report by the MNCs for tax year 2017. Now the companies will be required to file these reports for 2018.
MNCs are shifting their profits to low-tax countries to avoid heavy taxation and expenses to destinations where they are counted at higher rates. The OECD has undertaken a number of initiatives to counter this phenomenon. The OECD is working to align transfer pricing – an accounting standard where various entities of an MNC transact with each other – with value creation to curb tax avoidance.
G20 nations have developed a 15-point action plan to curb tax avoidance in which point 13 gives detailed guidelines for transfer pricing documentation and also provides a standardised reporting format called Country-by-Country Reporting (CBCR). The FBR’s rules bind MNCs to maintain documents of the transactions that their associates undertake.CBCR was likely to cause a meaningful impact on both the FBR and taxpayers, said Tola Associates, a chartered accountancy firm, in its comments on the new amendments.But it said the requirement of maintaining the Master File and CBCR would overburden the companies that were already meeting local documentation requirements. This may significantly enhance the cost and create new administrative challenges for the MNCs, it added.
The chartered accountancy firm said the FBR’s risk-based approach for transfer pricing assessment would help tax authorities to identify the mismatch in value creation and allocation of income by the MNCs. The turnover limit for reporting purposes is Rs50 million for the local file and Rs100 million for the Master File.
Pakistan is closely working with the OECD to strengthen its legal framework. The CBCR Peer Review was completed by the middle of current month and its report is expected next month, according to FBR officials.
The new transfer pricing regime being operated under the OECD guidelines could have an effective check on the MNCs. Under the traditional transfer pricing mechanism, the FBR has raised Rs3 billion worth of tax demand till a year ago, most of them against pharmaceutical companies, according to the FBR.
On the recommendation of the UK Tax service, the FBR has also defined liaison office, which may be used for tax avoidance as it is not subject to the taxes.
There are about 200 MNCs working in Pakistan, majority of whom are in the construction sector.
SC committee proposes offshore tax amnesty scheme
A Supreme Court-constituted committee has proposed to offer an offshore tax amnesty scheme to all Pakistanis, asking them to get their hidden foreign assets legalised at low tax rates.
This could be a once-in-a-lifetime opportunity for wealthy Pakistanis, as according to the proposal, those who would not avail the scheme – despite having foreign assets of over $100,000, would be deemed to have committed an offence under the Anti-Money Laundering Act 2010.
The three-member committee has, however, suggested that there should be no immunity from the prosecution under the Anti-Terrorism Act 1997 and the Anti-Money Laundering Act of 2010.
The scheme has been proposed for a period of three months to nine months, and the higher tax rate will be applicable on those who avail the offer at the last leg of the scheme.
It has proposed tax rates ranging from 2% to over 10%, offering the lowest rates for liquid assets that are declared and transferred to Pakistan.
It has further suggested that the tax rates may gradually be increased for assets disclosed and invested in special foreign currency-denominated instruments, and bonds with a specific maturity period of up to ten years.
The highest tax rates have been proposed on assets that will be declared under the scheme, but are not repatriated to Pakistan.
The minimum declared value of an asset should not be below the cost of acquisition of the asset, according to the committee’s recommendations.
The scheme has the backing of the Supreme Court of Pakistan, which had set up the three-member committee headed by State Bank of Pakistan Governor Tariq Bajwa and comprising Federal Board of Revenue Chairman Tariq Pasha and Finance Secretary Arif Ahmed Khan.
All Pakistani citizens would be eligible to avail the scheme in respect of their foreign assets and incomes except foreign assets created through corruption by misusing the authority of public office and through criminal activities such as terrorist financing and narcotics.
The committee has recommended excluding public office holders or politically exposed persons from the scope of the amnesty scheme.
The committee has also recommended that the scheme should also be offered to non-resident Pakistanis.
Turkish envoy, LCCI discuss trade issues
Turkish Ambassador Mustafa Yurdakal has said that friendly and cordial relations with Pakistan should translate into trade and economic ties.
Speaking at the Lahore Chamber of Commerce & Industry (LCCI), the Turkish envoy agreed that the volume of bilateral trade between both countries, which currently stands at $497 million, has room to increase.
He said that negotiations for a free trade agreement (FTA) between the two countries are under way and trade will jump once it is finalised. Pakistan, especially Lahore, is an investment hub for Turkish investors, he added.
LCCI President Malik Tahir Javaid said that Pakistan’s exports to Turkey are constantly decreasing since 2011 when they stood at $756 million. In 2016, the value of total exports plunged to $237 million.
As far as imports from Turkey are concerned, the amount has gone up from $160 million to $260 million in five years. Javaid said the FTA can potentially help Pakistan in increasing the bilateral trade to $4 billion. In order to achieve this objective, elimination of tariffs along with concerns regarding non-tariff barriers need to be addressed.
CPEC’s transparency: nha admits irregularities in award of $2.9bn contract to Chinese firm
The National Highway Authority (NHA) chairman confessed on Tuesday that there were irregularities in the award of a $2.9-billion contract to a Chinese firm for construction of a motorway under the China-Pakistan Economic Corridor (CPEC). The admission raises transparency concerns in the multi-billion dollar deals. NHA Chairman Jawwad Rafique Malik admitted that concessions worth roughly $200 million given to the China State Construction Engineering Company (CSCEC) were not part of the original bidding documents Pakistan had floated for the construction of the 392-kilometre long Multan-Sukkur section.
The chairman also confessed that the Rs294.4-billion or $2.9-billion contract had been awarded to the Chinese company on an “alternate bid”, which the company had submitted after quoting its original bid.
The chairman made these admissions before the Senate Standing Committee on Finance and Revenue that met on Tuesday under the chairmanship of PPP Senator Saleem Mandviwalla. These admissions carry huge implications for the multi-billion dollar CPEC projects and may land the government in trouble.
These confessions also revealed that controlled competition among three Chinese companies was not at all fair play, as the NHA engaged with the so-called lowest bidder in violation of the Public Procurement Regulatory Authority Rules of 2004.
Several senators have moved a calling-attention notice in the Senate, asking for rationale behind the huge tax exemptions. The Senate standing committee would give a report to the upper house of parliament on its findings.
The Executive Committee of the National Economic Council (Ecnec) had approved the Multan-Sukkur project at a cost of Rs259 billion but the lowest bid CSCEC gave amounted to Rs406 billion, said Malik. He further told the committee that CSCEC also submitted an “alternate bid” valued at Rs339 billion.
Upon this, Senator Nauman Wazir Khattak of the PTI questioned whether the PPRA Rules of 2004 allowed submission of alternate bids.
The chairman claimed that the rules allowed it but he could not cite the relevant PPRA Rule in his defence.