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Govt expected to keep standard rate of GST unchanged at 18%

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1 year ago

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  • Govt also considering amendments to bring retailers in tax net. 
  • Options for documentation of property sector also being looked into.
  • FBR chairman gives detailed presentation on budgetary proposals.

ISLAMABAD: The government is expected to keep the standard rate of General Sales Tax (GST) unchanged at 18% for the upcoming budget 2023-24, reported The News.

The government is also working on jacking up rates of withholding taxes where applicable and possessed the potential to increase tax revenues. The government also considered amendments for retailers to bring millions into the tax net. Schemes for luring retailers into the tax net have miserably failed in the last two to three decades.

Different proposals are under consideration for slapping Minimum Asset Tax (MAT) on both moveable and immovable assets but the Federal Board of Revenue (FBR) has been advised to get the endorsement of the constitutionality of the proposed taxation measures to avoid landing into litigations.

The government is also looking into options for the documentation of the property sector for achieving a highly ambitious tax collection target of Rs9 to Rs9.2 trillion for the upcoming budget.

These proposals were discussed in a meeting chaired by Finance Minister Senator Ishaq Dar on budgetary proposals at the Finance Division. 

State Minister for Finance Dr Ayesha Ghous Pasha, Special Assistant to Prime Minister (SAPM) on Finance Tariq Bajwa, SAPM on Revenue Tariq Mehmood Pasha, Chairman Reforms and Resource Mobilization Commission (RRMC) Ashfaq Yousuf Tola, finance secretary, FBR chairman, and other senior officers from Finance Division and FBR attended the meeting.

FBR Chairman Asim Ahmad gave a detailed presentation on budgetary proposals for the Federal Budget 2023-24. 

Finance Minister Dar reiterated the resolve of the government to provide a business and people-friendly budget. He added that the government is committed to ensuring that the new budget brings economic prosperity for all sectors of the economy and ensures the distribution of resources equitably among various sectors, the official statement concluded.

The meeting discussed some taxation proposals including a measure to tax the exporters that hold back foreign exchange in anticipation of the devaluation of the rupee against other international currencies and resultantly earning a gain on their foreign exchange.

Such gain can be computed as the difference between the foreign currency conversion rate prevailing after a specified number of days of export and the conversion rate on the date when the foreign currency is brought to Pakistan. Since the FBR is not privy to these details, it is recommended that the task to collect this levy be entrusted to the State Bank of Pakistan.

For promoting documentation in exports through the minimum tax regime, Pakistan’s economy heavily relies on exports, and as such, the government has been taking measures to promote and incentivise them.

One such measure is the FTR regime for exporters. It is recommended that the FTR scheme for exporters should be shifted to a minimum tax regime (MTR) scheme in the first phase to encourage documentation.

In the next phase, exporters should be allowed to avail 100% tax credit subject to certain conditions, similar to the provisions under the law for non-profit organisations. To avail this benefit, exporters must maintain proper documentation and comply with relevant government regulations. The proposed MTR scheme can promote documentation in exports and incentivise exporters to maintain proper financial statements, ultimately leading to a more transparent and inclusive economy.

This scheme can also help the government increase tax revenue, bringing in much-needed funds towards public services and development projects. 

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Dar chairs the CCOP meeting; Blue World’s bid offer of Rs.10 billion is rejected.

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The Foreign Minister/Deputy Prime Minister chaired the Cabinet Committee on Privatization meeting.

Other committee members who attended the conference included the Federal Secretaries of several Divisions, the Ministers of Finance and Revenue, Industry and Food, Commerce, Power, and Privatization.

The CCOP took the PC Board’s recommendation into consideration and suggested that Blue World’s bid of 10 billion rupees for the sale of 60% of PIACL’s shares be rejected. The bid was rejected by the CCOP, who chose to follow the PC Board’s advice.

The government’s determination to sell out PIACL through government-to-government or privatization was reaffirmed by the CCOP.

The CCOP was pleased with the Aviation Division’s evaluation of PIACL’s sound financial standing.

Additionally, the CCOP established a committee, chaired by the Minister of State for Finance, to assess potential transaction possibilities for the privatization of the Roosevelt Hotel and the appropriate modes of adoption in light of existing legal rules.

Prior to its subsequent meeting, the CCOP also ordered that all difficulties be resolved and an agreement for the selling of services to an international hotel be concluded.

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The KSE-100 Index has surged by 790 points, resulting in an all-time peak for the stock exchange.

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The benchmark KSE-100 Index increased by 790 points, marking a new all-time high for the Pakistan Stock Exchange (PSX) at 94,982 points.

The record-breaking performance underscores a surge of optimism and investor confidence in the stock market.

As investors responded to favorable economic signals, the market experienced a significant increase of over 500 points in early trading. Later, the KSE-100 Index reached another record level of 94,786 points after adding 594 points to its upward trajectory.

This positive development comes as the State Bank of Pakistan’s (SBP) foreign exchange reserves saw an increase of $84 million, reaching $11.26 billion during the week ending November 8, according to data released by the central bank on Thursday.

This represents an increase of 0.75% from the previous week. In addition, the nation’s total liquid foreign reserves experienced a modest increase, increasing by $33.7 million or 0.21% week-on-week to $15.97 billion.

In contrast, commercial banks’ reserves experienced a decline of $50.3 million or 1.06%, ultimately settling at $4.71 billion.

Furthermore, the economic team of Pakistan has expressed confidence in the discussions with the International Monetary Fund (IMF). Minister of State for Finance Ali Pervaiz Malik, in an exclusive conversation with Samaa TV, claimed talks were moving in a positive direction.

Highlighting improvements in Pakistan’s economic conditions, Malik noted substantial progress over the past six months to a year. He emphasized that Pakistan’s current economic situation has seen significant enhancement, with a reduced current account deficit of only $100 million in the first quarter, a reflection of the government’s strategy to increase remittances and boost exports.

Malik shared that discussions with the IMF are primarily focused on external financing, and while there have been speculations about a potential mini-budget or an increase in the petroleum levy, he clarified that these are currently premature considerations.

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Positive IMF negotiations propel KSE-100 Index above 94,000 points

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As a result of investors’ optimism about the reported progress in the continuing talks with the International Monetary Fund (IMF), the Pakistan Stock Exchange (PSX) experienced a robust surge.

The benchmark KSE-100 Index of the PSX, which tracks market sentiment, rose 713 points to a new record high of 94,068 points, breaking above the 94,000-point barrier, as the trading session began.

Early in the day, the stock market began its upward trajectory as the KSE-100 Index steadily rose, gaining 574 points to reach 93,932 points. A possible agreement with the International Monetary Fund (IMF) might lead to more fiscal stability and back Pakistan’s economic reforms, which is why investors are so optimistic about the country’s future.

Officials from the Federal Board of Revenue (FBR) informed the International Monetary Fund (IMF) on Wednesday that the government would not be introducing a mini-budget and would instead continue to aim to collect Rs12,970 billion in taxes each year.

In line with continuing discussions with the Fund, FBR sources revealed that petroleum goods will not be subject to the General Sales Tax (GST).

The fact that Pakistan’s tax-to-GDP ratio has increased from 8.8% to 10.3%, a 1.5% gain viewed as a favorable sign of Pakistan’s fiscal policies, has reportedly pleased the IMF, who has voiced satisfaction at Pakistan’s recent economic performance.

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