Government to dissolve transfer pricing directorate
The federal government, in its supplementary finance bill, has recommended the withdrawal of legislation for establishing the Directorate General of Transfer Pricing. The directorate was being set up to scrutinise master files and other records of multinational companies and enterprises with turnover exceeding Rs100 million and investigate billions of rupees worth of black money stashed abroad. After the approval of the Second Supplementary Finance Bill 2019 by parliament, the Directorate General of Transfer Pricing would be dissolved. However, Federal Board of Revenue (FBR) spokesperson and Member Inland Revenue Atiq Sarwar said the Directorate General of International Taxes would be set up in place of the transfer pricing directorate in June 2019. He pointed out that the Directorate of Transfer Pricing had to be established according to provisions of the Finance Act but could not be practically set up. The directorate could not even appoint its director general and other staff and as a result companies declined to provide country-by-country record of their businesses to the FBR.
SECP sets additional terms for registering global firms
The Securities and Exchange Commission of Pakistan (SECP) has specified additional requirements and documentation for the registration of foreign companies interested in operating in Pakistan. According to the Companies (Incorporation) Regulations 2017 issued by the SECP on Friday, the commission will obtain security clearance from the Ministry of Interior prior to the incorporation of security service providing companies, those having foreign subscribers/officers and companies having foreign subscribers/officers who are Afghan or Indian nationals. The commission also identified additional requirements for the foreign subscribers and security clearance.
As Gulf states give $4bn, pressure eases on external account
With the inflow of $2 billion in the past two days, Pakistan has received a total of $4 billion in its foreign currency reserves from friendly Gulf countries– Saudi Arabia and the United Arab Emirates (UAE) – in the past three months. The deposits, which came under financial packages totalling $6 billion from the two Gulf states aimed at stabilising Pakistan’s dwindling foreign currency reserves, have helped stave off immediate challenges and the country will be able to make international payments in the ongoing fiscal year. Besides, the receipts have also eased the pressure on further rupee depreciation and interest rate hikes in the short-to-medium term. Now, the government needs to focus on creating avenues for boosting its foreign income through higher exports and attracting more remittances to avoid reliance on foreign assistance and loan programmes in the long run.
PKR strengthens against $
The rupee strengthened against the dollar at Rs138.64/Rs139.01 in the inter-bank market on Friday compared with Thursday’s close of Rs138.68/Rs139.05, according to the State Bank of Pakistan (SBP). Last year in November, the rupee fell to an all-time low at Rs144 against the dollar in intra-day trading before recovering to Rs139.05 in the sixth round of devaluation since December 2017. Cumulatively, the rupee has lost 31.8percent of its value in the last 13 months.
Pak receives last tranche of Saudi Arabia’s $3bn aid package
The State Bank of Pakistan (SBP) has received the last tranche of $1 billion from Saudi Arabia on Friday. The inflow marks back-to-back receipt of $1 billion deposits in SBP foreign currency reserves for the second successive day, under the friendly countries’ economic assistance package. On Thursday, UAE deposited $1 billion under the recently announced $3 billion cash programme for Pakistan. “SBP has also received the third tranche of USD one billion from SaudiArabia,” the central bank said on Friday. Earlier, the SBP announced that Pakistan’s foreign currency reserves had dropped to a 57-month low of $6.63 billion as of January 18, 2019. With these reserves, Pakistan could hardly cover one-and-a-half-month of imports. The receipt of the tranches have increased Pakistan’s capacity to conveniently make international payments for imports and debt servicing.
Railways to move freight head office to Karachi
Federal Minister for Railways Sheikh Rasheed Ahmed announced on Friday that the head office of Pakistan Railways’ freight department would be shifted to Karachi. Talking to source following the inauguration of a freight train under public-private partnership arrangement, the minister stressed that the railways service was crucial for economic development of any country. “It is also a vital component of a nation’s transport and communications system,” underlined the minister. “Hence, it ought to be efficient and affordable.” Disclosing that 20 freight trains along with 20 passenger trains would be introduced in the current year, Ahmed said a mechanism had already been established to make them sustainable ventures with zero compromise on the quality of service. He reaffirmed that an efficient railway service could also help address the growing challenge of pollution, which severely affected public health besides deteriorating the environment.
Careem-Pak to collaborate with PM’s youth program
Prime Minister’s Youth Programme and Careem Pakistan have agreed to collaborate to extend Careem’s employment services to the maximum number of youth. The decision was taken during a meeting held between Muhammad Usman Dar, Special Assistant to the Prime Minister on Youth Affairs and Junaid Iqbal, the Managing Director Careem Pakistan, source said. The aim of the meeting was to explore the possibility of mutual cooperation to create employment opportunities for youth in the online market place. It would not only empower them economically but would also contribute significantly towards their social uplift. Muhammad Usman Dar appreciated the efforts of Careem Pakistan in providing not only affordable and quality transportation services, but also for their role in creating decent employment opportunities for the youth in all major cities of Pakistan. Recently, Mudassir Sheikha, co-founder, and CEO of the company was the only Pakistani to make Bloomberg’s top 50 list for 2018. The company has more than 1 million drivers in the Middle East and Northern Africa allowing customers to book not just cars but also bikes, rickshaws, and boats.
Challenge of meeting revenue collection target rises
The second mini-budget, which is called the Finance Supplementary (Second Amendment) Bill 2019, largely lacks the policy measures to overcome the shortfall in the revenue target of Rs4.398 trillion for FY19. Rather, the challenge of achieving the revenue collection target has grown after the government announced tax incentives worth Rs6.8 billion for businesses, industries and traders at the Pakistan Stock Exchange (PSX). To recall, the government already missed the revenue collection target by around Rs170 billion for the first half (July-December) of the current fiscal year 2019.
Big defaulters get Rs200 bn bailout
The Pakistan Tehreek-e-Insaf (PTI) government on Thursday decided to bail out big defaulters by waiving 50percent of their outstanding dues– or around Rs200 billion – on account of the Gas Infrastructure Development Cess (GIDC). Addressing a press conference, Finance Minister Asad Umar said that the government would amend the law relating to the GIDC in this regard. He added that the cabinet had taken a decision to offer 50 percent waiver on GIDC just as the compressed natural gas (CNG) sector availed this facility in the past. Fertiliser, textile and CNG sectors are among the major defaulters, which had received more than Rs400 billion from consumers on account of GIDC but did not to pay to the government after obtaining stay orders from courts. The cabinet on Thursday decided to bail out the three major defaulters by waving off 50percent outstanding amounts to the tune of Rs200 billion. However, major losers in this decision would be the poor farmers who had paid Rs120 billion in GIDC to fertiliser industry.
SBP brings framework to stop misuse of cross-border trade
The State Bank of Pakistan (SBP) has introduced a regulatory framework for authorised dealers (ADs)– banks dealing in foreign exchange – to mitigate the misuse of cross-border trade transactions for money laundering, terrorist financing and proliferation financing. Transferring value through legitimate trade transactions has become an increasingly attractive avenue for people involved in money laundering, terror financing and proliferation financing as they are able to easily obscure their transactions in significant volumes of international trade and escape detection. “The main methods by which such people transfer value through legitimate trade transactions are under-invoicing, over-invoicing, short/over-shipment, obfuscation of type of goods/services etc,” the SBP said in the Framework for Managing Risks of Trade Based Money Laundering, Terrorist Financing and Proliferation Financing.
FBR launches alternative dispute resolution system
The Federal Board of Revenue (FBR) has introduced a new system for alternative dispute resolution to resolve over 31,000 pending cases in various legal forums. The step has been taken to resolve Rs1,276-billion worth of tax revenue cases and help cover the Rs170-billion expected shortfall in FBR revenues. According to the plan, an Alternative Dispute Resolution Committee (ADRC) will be set up, headed by a retired judge, who will charge Rs75,000 or 4percent of the recovered amount, while committee members will be paid Rs50,000 or 3percent, whichever is lower. The FBR will make these payments from its budget while decisions of the committee will be binding on both the applicants and the FBR. However, criminal proceedings and legal implications for other cases will not be taken up by the ADRC.
Punjab to be made hub of social, economic, trade activities
Provincial Minister for Industries and Trade Mian Aslam Iqbal has said that Punjab will be made a real hub of social, economic and trade activities, where investment-friendly atmosphere has already been created and all possible facilities are being provided to the investors. While chairing a meeting on industrialisation and investment in the information technology (IT) sector and issues related to taxation, the minister announced that one-window operation was being initiated for 26 departments of Punjab. “With the provincial departments, some 19 federal departments will work jointly under one umbrella for the facilitation of investors,” Iqbal revealed. He informed the participants that representatives of investment companies have been consulted and a future action plan would be evolved in the light of their suggestions.
In next 6-month: knitwear sector sees 20pc export growth
Pakistan Hosiery Manufacturers and Exporters Association (PHMA) Central Chairman Muhammad Jawed Bilwani, while lauding the mini-budget, has voiced hope that the knitwear garment sector will be able to raise its exports by 20percent in the next six months provided the government meets its promises. In the past six months, Pakistan’s knitwear exports grew 10.5percent, enjoying the top ranking in the textile group and other sectors, he said. “Following the receipt of outstanding tax refunds and with assurances of uninterrupted gas and electricity supply, this sector will post 20percent growth in exports in just half year,” the chairman said. Bilwani also supported the option of providing refund bonds (promissory notes) to exporters with annual profit of 10percent and maturity of three years, for the clearance of Rs200 billion worth of tax refund claims, which would ensure liquidity for the businesses.