Latest news with #FBR
Express Tribune
6 hours ago
- Business
- Express Tribune
Retailers denounce harsh tax measures
Policymakers are expected to continue improvements on tax collection side to widen the tax net by signalling reduction in corporate and salary tax by 1% per year for the next 10 years and by reducing industrial energy tariffs. photo: file Listen to article The Chainstore Association of Pakistan (CAP), which represents the country's organised retail sector, has voiced concerns over harsh tax measures and enforcement practices, particularly those introduced through the Finance Act 2025. "Retail chains in the formal sector have worked tirelessly for years to adopt technology, ensure transparent sales reporting and contribute significantly to the nation's tax revenues as well as its exports," said Asfandyar Farrukh, Chairman CAP. "Yet, we face an unsustainable environment where legitimate businesses are treated as potential offenders, subjected to arbitrary tax assessments and left exposed to daily harassment that threatens both our operations and workforce." The association noted that while formal retailers accounted for only around 10% of Pakistan's retail trade, they generated the majority of tax revenue from the sector. However, recent tax policies and enforcement actions have placed growing pressure on the industry and threaten progress in documenting the economy. "It is our considered view that, given ever-increasing revenue targets and the slow pace of broadening the tax base, some FBR field formations are using enforcement powers to impose excessive and arbitrary tax assessments and penalties on the already compliant businesses simply to boost collections," said Tariq Mehboob, Patron-in-Chief of CAP. Similarly, the SITE Association of Industry Karachi rejected the controversial Sections 37A and 37B introduced in the Finance Act, declaring that the industrial community would not tolerate such oppressive laws. SITE Association President Ahmed Azeem Alvi condemned the provisions of these laws, which granted powers to FBR officers to arrest honest taxpayers based solely on suspicion and even file FIRs.
Express Tribune
6 hours ago
- Business
- Express Tribune
PM advises FBR to go slow on curbing cash economy
Listen to article Prime Minister Shehbaz Sharif has directed officials to gradually implement the decision of treating half of cash expenses above Rs200,000 as part of income as the business community defers its strike, except for the Lahore Chamber that will press ahead with plans to close shops on Saturday. The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) postponed the strike for one month after meeting the government's economic team at the Ministry of Finance on Tuesday. However, the Lahore Chamber of Commerce and Industry (LCCI), which was once considered close to the PML-N, announced that it would go on strike on July 19. LCCI President Mian Abuzar Shad said that his chamber would observe the strike due to rejection of its demand to defer the enforcement of the law for one month. The business community wants immediate withdrawal of the Federal Board of Revenue's (FBR) authority to arrest people on allegations of fraud, powers to add back 50% of cash expenditure above Rs200,000 to the income and depute taxmen in factories. It also demanded that the FBR's discretion to determine input adjustments and the enforcement of electronic invoicing should be suspended. In a meeting held at the PM Office on Monday, Shehbaz Sharif asked tax authorities to adopt a go-slow policy instead of swiftly enforcing the recently approved tax law, according to the government sources. They said that the PM was of the view that the FBR may gradually implement the condition of adding back the cash expenditure of over Rs200,000 to the income. The step has been taken in the budget to discourage the use of cash by traders and firms. According to new Section 21S and Q of the Income Tax Ordinance, 50% of the expenditure claimed in respect of sale where the taxpayer received payment exceeding Rs200,000 otherwise than through a banking channel or digital means against a single invoice containing one or more than one transactions of supply of goods or provision of services will be treated as income. Section 21(q) states whereby 10% of the claimed expenditure attributable to purchases made from persons who are not National Tax Number (NTN) holders shall be disallowed. However, the tax authorities were trying to find a mechanism to adopt a gradual approach as it would require amendment to the ordinance. One of the options was to issue an explanatory note but it would lack the binding legal force. Pakistan's leading business chambers on Tuesday again asked Finance Minister Muhammad Aurangzeb to immediately suspend the laws that authorise the arrest of taxpayers and penalise the use of cash. The government claimed that it could not suspend the law until the International Monetary Fund (IMF) was taken into confidence. Interestingly, last week the government bypassed the IMF to exempt taxes on sugar import. In a press note, the finance ministry said that an important meeting was held with representatives from the business community, chambers of commerce and traders' organisations. The meeting thoroughly discussed concerns over Section 37A and other related matters introduced under the Finance Act 2025. Aurangzeb assured the business community of the government's full cooperation, emphasising that the objective was to prevent large-scale tax fraud and not to harass legitimate and honest businesses. It was decided in the meeting that a committee would be formed under the chairmanship of Special Assistant to Prime Minister on Industries and Production Haroon Akhtar Khan. Besides government officials, the committee will also comprise nominated representatives from the business community. The committee will hold detailed consultations over 30 days and present a mutually agreed solution to the PM. After the meeting, FPCCI President Atif Ikram Sheikh announced the postponement of the strike for one month. However, he was immediately interrupted by the LCCI president, who said that Lahore would observe the strike because of the rejection of its demand. The finance ministry first announced that the business community had postponed the strike but later it issued an amended version and deleted the sentence related to the strike. Suhail Altaf, representing the Rawalpindi Division, said that the government had assured that it would not create hurdles in the way of business activities until the matter was resolved by the committee. The FBR on Tuesday also issued new instructions to empower the district administration to seize cigarettes being sold without valid tax stamps.
Express Tribune
6 hours ago
- Business
- Express Tribune
Moody's questions missed tax target
Listen to article Moody's, a global credit rating agency, on Tuesday inquired about the implications of missing a key target of increasing the tax-to-GDP ratio to 10.6% in the last fiscal year, as Pakistan made an emphatic pitch for an upward revision in the current junk rating. The credit rating agency also asked about progress in trade talks with the United States and whether the central bank was still exercising any control over imports and the exchange rate market, according to officials privy to the meeting details. Moody's raised these questions during a session with Pakistan's Finance Minister Muhammad Aurangzeb. Minister of State for Finance Bilal Kayani and Governor State Bank of Pakistan Jameel Ahmad also attended the session, which would determine whether the rating agency would upgrade Pakistan in its next announcement. Pakistan's current Moody's rating is Caa2 with a positive outlook. This rating was upgraded from Caa3 with a stable outlook in August 2024. But it is still below the investment grade and hampers Pakistan's smooth entry in the international capital markets to raise debt. According to the officials, Moody's asked about the impact of missing the tax-to-GDP ratio in the last fiscal year on this fiscal year's targets. Aurangzeb said that the Federal Board of Revenue (FBR) would give a separate briefing to the rating agency for addressing any of its concerns, according to the officials. The FBR's tax-to-GDP ratio remained at a little over 10.2% as against the target of 10.6% after the FBR could pool only Rs11.745 trillion in taxes in the fiscal year 2024-25. The government missed the annual tax collection target by a margin of Rs1.225 trillion. After the meeting that Moody's team was provided with a comprehensive overview of Pakistan's reform journey, with a particular emphasis on improving the tax-to-GDP ratio through technology-driven tax administration reforms, digitisation of systems, and robust enforcement measures. The minister emphasised that under the direct oversight of the prime minister — who chairs regular meetings on tax reform — the government was implementing measures to expand the tax base, plug leakages, and enhance compliance. Aurangzeb noted that the Rs2 trillion revenue delta achieved this year had come through autonomous efforts, and the government was firmly committed to reaching a tax-to-GDP target of 13 to 13.5% in the next few years, according to the ministry. Moody's also asked about the details of the Pakistan-US trade talks but the government did not share any details except that the deal was expected soon. The sources said that the United States has asked for preferential trade treatment to which Pakistan has proposed to sign a pact. "Ongoing discussions with the United States on preferential tariff access were noted as making encouraging headway," the Ministry of Finance stated after the meeting. There were also questions about the average interest rate that the government used for allocating the Rs8.3 trillion for debt servicing for this fiscal year. Moody's was informed that a 12% average interest rate had been used for this fiscal year. Moody's asked about the movement in the exchange rate and any restrictions on imports. The central bank clarified that the exchange rate was market determined and there were no restrictions on imports. The rupee has again started coming under pressure and the grey market is resurfacing with a rate that is about Rs7 per dollar higher than the inter-bank rate, according to the exchange market dealers. According to the finance ministry, the Finance Division provided an in-depth briefing on Pakistan's macroeconomic outlook, reform agenda, and financial stability. "Looking ahead, the finance minister expressed optimism that the improving macroeconomic indicators and reform momentum would be positively acknowledged by rating agencies, further strengthening Pakistan's case to tap international markets and deepen its external sector stability," said the ministry. Aurangzeb and his team presented compelling evidence of macroeconomic recovery, including a sharp reduction in inflation, a cut in the policy rate, stabilisation of the exchange rate, a current account surplus, and a surge in foreign exchange reserves — crossing $14 billion by the end of June, stated the ministry. It added that the improvements in remittance inflows and export performance were also cited as signs of resilience and renewed investor confidence. During the session, the finance minister apprised the Moody's team of the significant strides Pakistan has made in stabilising its economy and laying the foundations for sustainable and inclusive growth, it added. He underlined the successful completion of the final International Monetary Fund (IMF) review under the Stand-By Arrangement, including the disbursement of the second tranche and progress under the Resilience and Sustainability Facility (RSF), as key milestones that have restored confidence in Pakistan's economic management. The minister highlighted a series of structural reforms undertaken by the government to anchor long-term stability. These included prudent fiscal measures in the recently announced budget, tariff and trade liberalisation geared towards export-led growth, and concerted efforts to rationalise expenditure. The meeting further outlined Pakistan's re-engagement with global financial markets, including the successful arrangement of $1 billion in commercial financing from the Middle Eastern region, plans for an inaugural Panda bond, and Pakistan's intent to explore the Eurobond and other international debt markets as credit ratings improve. The finance minister also addressed queries from the Moody's team and reiterated Pakistan's commitment to staying the course on macroeconomic reforms, including in areas of privatisation, restructuring of state-owned enterprises (SOEs), and right-sizing of government.
Business Recorder
7 hours ago
- Business
- Business Recorder
Freight forwarders: FBR notifies licensing rules
LAHORE: The Federal Board of Revenue (FBR) has officially notified the Freight Forwarders Licensing Rules, 2025, through SRO 1222(I)/2025, establishing Pakistan's first comprehensive legal framework to regulate freight forwarding operations across sea, air, land, and rail logistics. Director IOCO Imran Sajjad Bukhari has started implementation of the new rules. So far conditions for a licence is concerned, the licensing authority may on fulfilling all conditions under rule 1209, grant a non-transferable licence for a period initially for two years which shall be renewable after every two years subject to the condition that the licence shall not be transferable or sub-let and no licensee shall bring about a change in the composition of the company, proprietorship or firm. In addition, change of status of firm from proprietorship to partnership to company shall be allowed on submission of partnership deed duly attested by notary public on successful passing of interview or test or both by the new proprietor or partner to be conducted by the licensing authority or any officer authorized in this behalf. Retirement of partner shall be allowed on submission of an additional undertaking that the existing partner may take the responsibility of all previous and future acts of the company and shall be responsible for payment of any outstanding government dues accrued on the company before and after retirement of the partner. Dissolution of partnership shall be allowed on submission of dissolution deed and an under taking that the person continuing the firm shall be responsible for the payment of all or any outstanding government dues accrued in the name and title of the firm. Change of status of firm from proprietorship/partnership to limited company or changes of directorship in case of a company shall only be allowed if duty approved by the Securities and Exchange Commission of Pakistan. In case of death of an individual licensee, the licence may be reissued to his legal heir if he fulfils the requisite criteria under the taw. The new licensee shall execute a fresh bond for the purpose, however, the licensing Authority may allow the transfer of the security deposit held in the name of the deceased licensee to the name of new licensee subject to adjustment of the liabilities attached to such deposit provided that subject to such additional conditions as the licensing authority may impose the licence may be renewed for a period of five years, if it has remained valid for the last 10 years and no criminal proceedings have been initiated or pending against the licensee. In case the licence is lost or damaged, a duplicate copy thereof may be issued on a written request by the licensee, duly supported by the documentary evidence regarding loss or damage and on payment of fee of five thousand rupees. Until now, it may be noted that the sector operated without formal regulatory oversight, despite its critical importance to trade and logistics. Copyright Business Recorder, 2025
Business Recorder
7 hours ago
- Business
- Business Recorder
All types of mangoes for current season: FBR fixes new customs/export values
ISLAMABAD: The Federal Board of Revenue (FBR) has fixed new customs/export value of all types of mangoes for current season. In this regard, the Directorate of Valuation Lahore issued a valuing ruling (2 of 2025) following directive of the FBR. Under the revised valuation regime applicable for all destinations, the new export (FOB) value of all types of fresh mangoes has been fixed at US$800 per metric ton; mango pulp, US$1000 per metric ton and export value of dry mangoes has been set at US$1500 per metric ton. According to the new ruling, the FBR letter read with Ministry of Commerce letter directed the Directorate of Valuation, Lahore to determine export value of mangoes. Consequently, an exercise was initiated by the Directorate of Customs Valuation Lahore to determine values of the said item. Meeting was held for participation of major stakeholders including, representatives from All Pakistan Fruit & Vegetable Exporters, Importers & Merchants Association and exporters of mangoes. The issue pertaining to the valuation of the subject goods was deliberated upon in detail in the afore-referred meeting. Proposals submitted by stakeholders for consideration were thoroughly analyzed. The documents submitted by the stakeholders, arguments submitted during the meeting, price trends and exports data from PRAL were examined for determination of customs export value of mangoes. Valuation provisions under section 25 (15) of the Customs Act 1969, export data, market survey were followed to determine export value that included export data market trends, international market trends and documents submitted by stakeholders, the ruling added. Copyright Business Recorder, 2025
