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Business Recorder
16-06-2025
- Business
- Business Recorder
Collection of ST on services: KPRA registers 27.3pc growth
PESHAWAR: Khyber Pakhtunkhwa Revenue Authority (KPRA) has registered a growth of 27.3% in collection of Sales Tax (GST) on Services as compared to last fiscal year while Infrastructure Development Cess increased by 115%. By the end of the year, total collections by KPRA are expected to reach PKR 50.7 billion. In the first 10 months of FY 2024–25 (July to April), KPRA collected PKR 42.1 billion, showing strong performance, said a white paper on the budget for financial year 2025-26. The Khyber Pakhtunkhwa Revenue Authority (KPRA) was set up under the KP Finance Act, 2013 as an independent body to collect Sales Tax on Services and other provincial taxes. Over the years, KPRA has become an important institution on helping the province increase its own source revenues (OSR), bring more services under the tax net, and support better delivery of public services. This year, KPRA also expanded its tax base through the KP Finance Act, 2024. New sectors were added like healthcare, passenger transport, health insurance, and digital services. Tax rates were increased for restaurants and wedding halls, and the Cess rate was doubled and applied to exports and transit trade. These steps have helped improve collections and brought KPRA in line with modern tax practices. The following table highlights KPRA's revenue performance over recent fiscal years: Collection in FY 2023-24 is exclusive of the reimbursement of an amount of Rs. 4.1Bn received to the province from FBR on account of Cross Input Tax Adjustment. In the current FY no amount has been reimbursed from FBR. In FY 2024-25 (Jul-Apr), KPRA achieved a remarkable 27.3% growth in Sales Tax on Services (STS) collections and a 115% increase in Infrastructure Development Cess (IDC) reflect KPRA's concerted efforts in expanding the tax base, strengthening compliance, and implementing targeted enforcement measures. Tax Reforms and Sectoral Expansions As part of its reform agenda, KPRA introduced new taxable service sectors through the KP Finance Act, 2024, incorporated into the Second Schedule of the KP STS Act, 2022. These sectors and their revenue contributions include: Rationalizing tax rates for wedding halls – (Total Growth 40%) Increasing tax rate on Restaurants to 6% – (Total Growth 21%) Health Care Services – 30 Million Additional Digital Initiatives Transition from traditional return filing to the IRIS system, with the adoption of a Single Sales Tax Return (SSTR) for sectors like Oil & Gas and Microfinance Banks. Deploying the Restaurant Invoice Management System (RIMS) to enhance tax administration efficiency. Leveraging the existing provisions within the KP STS Act to encourage reporting of tax evasion, fostering a culture of accountability. Leveraging social media platforms to conduct awareness sessions, educating taxpayers on compliance requirements and benefits. Sourcing data from statutory bodies such as SECP, NADRA, and PTA to improve taxpayer identification and compliance monitoring. Implementing a Risk-Based Audit and focus on high-risk areas. Finalizing an MoU with the FBR and other provinces for data sharing, despite ongoing deliberations over discrepancies in the draft agreement. Consensus is expected soon, enabling seamless collaboration and enhanced revenue oversight. KPRA aims to invest in capacity building for its workforce, equipping them with advanced tools and trainings to handle emerging challenges in tax administration. This includes fostering partnerships with international organizations to adopt global best practices in revenue management. Copyright Business Recorder, 2025
Business Recorder
02-06-2025
- Business
- Business Recorder
Budget 26: Govt looking to boost export of ‘made in Pakistan' mobile phones, say assemblers
Pakistan's mobile phone assemblers claim the federal and provincial governments will announce a policy in the upcoming budget 2025-26 aiming to boost phone exports. This is to maintain the balance of trade which is likely to widen in the wake of surge in imports from the US in the aftermath of trade talks between Islamabad and Washington, according to several experts that Business Recorder spoke to. One leading domestic mobile phone assembler told Business Recorder on the condition of anonymity that the government is working to announce a rebate on export of mobile phones in the upcoming budget, scheduled to be announced on June 10. More luxury items set to attract sales tax in upcoming Pakistan budget Separately, Muhammad Idrees Memon, a former president of Karachi Electronic Dealers Association (KEDA), told Business Recorder that the federal and provincial governments are designing a policy similar to the Export Facilitation Scheme (EFS) which will incentivise the export of 'made in Pakistan' mobile phones. Both federal and provincial governments were approached to confirm the development. They were yet to reply by the time of filing this story. Memon, who is also a former president of Karachi Chamber of Commerce and Industry (KCCI), said the Sindh government and KCCI are currently in talks about removing or reducing the Infrastructure Development Cess (IDC) on the import of mobile parts (CKD/completely knocked down) for those manufacturers who want to export their products. The IDC is being collected in the range of 1.81% to 1.85% on imports at the provincial level. He also said the Sindh government will finish working on the export package for mobile phone exporters 'over the next two to three days (by Wednesday)' and announce it in the budget. 'The Punjab government has already agreed to a similar export package. The ministry of finance, ministry of commerce, Federal Board of Revenue (FBR) and Engineering Development Board (EDB) all are supporting us,' he said. He said Sindh Chief Minister Murad Ali Shah, and PPP ministers and members of the provincial assembly including Mukash Kumar Chawla and Dharejo are working with KCCI leadership to design an EFS-like product to promote and support the phone exports to help partially controlling the likely increase in balance of trade. He added that Pakistan is considering increasing imports of products including cotton and edible oil from the US to avoid President Trump's proposal to double tariff to 29% on imports from Pakistan. Once the provincial government finalizes its tax incentives for exports then the federal government will also join the export package in the making, Memon said. 'There is huge potential and Pakistan can earn a significant amount of foreign exchange through exporting 'made in Pakistan' phones,' Memon said. He said Pakistan is already exporting mobile phones to Middle Eastern countries including Dubai, but the volume of the trade is insignificant. Almost all the Chinese phones - about two dozen brands - available in the country are being assembled locally. Memon said Pakistan is importing 100% raw material (parts/CKD) for mobile assembling in the country at present. The removal of IDC on imports would enable manufacturers to add value to the products and earn a handsome amount on their exports. In addition to this, this would also help create a new employment generation and promote 'made in Pakistan' products across the globe. China looking to move export base to Pakistan Meanwhile, Aamir Allawala, CEO, Transsion Tecno Electronics, said that Chinese companies are interested in moving their export base to Pakistan due to availability of labour at a lower cost and to mitigate its risk associated with global trade war. 'Pakistan labour cost is only $140 per month compared with $800 in China,' he told Business Recorder. Almost all leading Chinese brands have already set up their factories in Pakistan including Xiaomi, OPPO, Vivo, Tecno, Infinix, Itel, realme, Redmi and ZTE. 'Pakistan can become a hub of export of Chinese brands to markets in Africa, Central Asia and Middle East. 'There is a huge potential on the table. The government should sit together with the local industry and chart a five year forward to take advantage of the changing global trends,' he said. Pakistan is now assembling almost all global brands of mobile phones locally, increasing the 'made in Pakistan' production to 95% of the local demand, while the share of imported phones (finished products) has reduced to merely 5%. The domestic production is saving around 15-20% in foreign exchange, as local assemblers are still importing almost all mobile phone parts from foreign manufacturers. According to Pakistan Bureau of Statistics' (PBS) data, the import of mobile phones (CKD/CBU) dropped 14% to $1.2 5 billion in the first 10 months of FY25 compared to $1.46 billion in the same period of the last year.
Business Recorder
02-06-2025
- Business
- Business Recorder
Budget 26: Govt looking to boost mobile phone export, say assemblers
Pakistan's mobile phone assemblers claim the federal and provincial governments will announce a policy in the upcoming budget 2025-26 aiming to boost phone exports. This is to maintain the balance of trade which is likely to widen in the wake of surge in imports from the US in the aftermath of trade talks between Islamabad and Washington, according to several experts that Business Recorder spoke to. A leading domestic mobile phone assembler told Business Recorder on the condition of anonymity that the government is working to announce a rebate on export of mobile phones in the upcoming budget, scheduled to be announced on June 10. More luxury items set to attract sales tax in upcoming Pakistan budget Separately, Muhammad Idrees Memon, a former president of Karachi Electronic Dealers Association (KEDA), told Business Recorder that the federal and provincial governments are designing a policy similar to the Export Facilitation Scheme (EFS) which will incentivise the export of 'made in Pakistan' mobile phones. Both federal and provincial governments were approached to confirm the development. They were yet to reply by the time of filing this story. Memon, who is also a former president of Karachi Chamber of Commerce and Industry (KCCI), said the Sindh government and KCCI are currently in talks about removing or reducing the Infrastructure Development Cess (IDC) on the import of mobile parts (CKD/completely knocked down) for those manufacturers who want to export their products. The IDC is being collected in the range of 1.81% to 1.85% on imports at the provincial level. He also said the Sindh government will finish working on the export package for mobile phone exporters 'over the next two to three days (by Wednesday)' and announce it in the budget. 'The Punjab government has already agreed to a similar export package. The ministry of finance, ministry of commerce, Federal Board of Revenue (FBR) and Engineering Development Board (EDB) all are supporting us,' he said. He said Sindh Chief Minister Murad Ali Shah, and PPP ministers and members of the provincial assembly including Mukash Kumar Chawla and Dharejo are working with KCCI leadership to design an EFS-like product to promote and support the phone exports to help partially controlling the likely increase in balance of trade. He added that Pakistan is considering increasing imports of products including cotton and edible oil from the US to avoid President Trump's proposal to double tariff to 29% on imports from Pakistan. Once the provincial government finalizes its tax incentives for exports then the federal government will also join the export package in the making, Memon said. 'There is huge potential and Pakistan can earn a significant amount of foreign exchange through exporting 'made in Pakistan' phones,' Memon said. He said Pakistan is already exporting mobile phones to Middle Eastern countries including Dubai, but the volume of the trade is insignificant. Almost all the Chinese phones - about two dozen brands - available in the country are being assembled locally. Memon said Pakistan is importing 100% raw material (parts/CKD) for mobile assembling in the country at present. The removal of IDC on imports would enable manufacturers to add value to the products and earn a handsome amount on their exports. In addition to this, this would also help create a new employment generation and promote 'made in Pakistan' products across the globe. Meanwhile, Aamir Allawala, CEO, Transsion Tecno Electronics, said that Chinese companies are interested in moving their export base to Pakistan due to availability of labour at a lower cost and to mitigate its risk associated with global trade war. 'Pakistan labour cost is only $140 per month compared with $800 in China,' he told Business Recorder. Almost all leading Chinese brands have already set up their factories in Pakistan including Xiaomi, OPPO, Vivo, Tecno, Infinix, Itel, realme, Redmi and ZTE. 'Pakistan can become a hub of export of Chinese brands to markets in Africa, Central Asia and Middle East. 'There is a huge potential on the table. The government should sit together with the local industry and chart a five year forward to take advantage of the changing global trends,' he said. To recall,Pakistan is now assembling almost all global brands of mobile phones locally, increasing the 'Made in Pakistan' production to 95% of the local demand, while the share of imported phones (finished products) has reduced to merely 5%. The domestic production is saving around 15-20% in foreign exchange, as local assemblers are still importing almost all mobile phone parts from foreign manufacturers. According to Pakistan Bureau of Statistics' (PBS) data, the import of mobile phones (CKD/CBU) dropped 14% to $1.2 5 billion in the first 10 months of FY25 compared to $1.46 billion in the same period of the last year.
Express Tribune
15-03-2025
- Business
- Express Tribune
Torkham closure costs $60m in trade
Torkham, a key border crossing between Pakistan and Afghanistan in the Khyber District of Khyber Pakhtunkhwa, remained closed for the 21st day on Friday amid rising concern of the businessmen of both the countries who are suffering huge losses due to the closure. The crossing was closed on February 21 after escalation of tensions between the border forces of the two neighbors due to construction of some structures close to the border by Afghan authorities in violation of an agreement. During subsequent exchanges of fire, three Afghan soldiers died while eight Pakistani paramilitary troops also sustained injuries. Last week, the two countries formed their respective jirgas which met at the border crossing and enabled a ceasefire at the border crossing. The Afghan jirga, however, did not hold a meeting with its Pakistani counterpart on Thursday after the inclusion of dozens of new members in the Pakistani delegation. According to sources, no meeting between the jirgas took place on Friday because of a public holiday in Afghanistan. However, the jirgas are likely to meet today (Saturday) to resolve the crisis. Customs sources said trade suspension is causing an estimated daily loss of $3 million in bilateral trade. They said imports from Afghanistan average $1.6 million daily, while exports amount to $1.4 million. Over the last 20 days, approximately $60 million in trade has been lost. Torkham Border Crossing facilitates the daily movement of around 10,000 people to Afghanistan. However, all movement and trade has been suspended since February 21 and over 5,000 trucks, including those carrying perishable goods, are stranded, causing heavy financial losses. Junaid Makda, president of the Pak-Afghan Joint Chamber of Commerce (PAJCCI), warned that if trade barriers are not removed, Pakistan risks losing its potential as a key trade corridor in the region and missing out on vast economic opportunities. "There is a need for immediate measures to resolve the growing trade crisis between Pakistan, Afghanistan, and Central Asian countries. The ongoing border closure, rising transportation costs, and increasing trade restrictions are not only damaging cross-border business but also hurting Pakistan's economy," he said. Makda said Khyber Pakhtunkhwa's government has recently reduced the Infrastructure Development Cess (IDC) to 1% on both forward and reverse transit trade with Afghanistan. He argued that any form of IDC on transit trade is unjustified, as it discourages legitimate businesses and violates international commitments. The imposition of IDC and the border closure are forcing Afghan traders to shift from Pakistani routes to Iranian ports, causing long-term damage to Pakistan's trade network. He said despite continuous efforts by PAJCCI, the situation has worsened. "The prolonged closure has diverted trade towards Chabahar and Bandar Abbas, making them more competitive routes. Uncertainty and long delays are eroding traders' confidence and discouraging investors." Makda said under international protocols, Pakistan is responsible for facilitating trade for landlocked countries like Afghanistan.
Zawya
05-02-2025
- Business
- Zawya
India to review tariff surcharges on luxury cars, solar cells, may spur US imports
India plans to review import tariffs on over 30 items, including luxury cars, solar cells and chemicals, a senior finance ministry official said, potentially leading to increased imports from the United States as global trade tensions grow. The move, aimed at reducing average tariffs, comes ahead of Prime Minister Narendra Modi's visit to the U.S. next week. In a bid to avoid President Donald Trump's growing tariff actions, India has already reduced average import tariff rates to 11% from 13% on several items in the latest budget. The finance ministry official did not give the time period for the completion of the consultation process, but industry analysts say the process could take months. Various Indian government departments, including those overseeing heavy industries and renewable energy, will soon consult local industry on reducing the Agriculture Infrastructure Development Cess (AIDC), Sanjay Agarwal, chairman of Central Board of Indirect Taxes and Customs, told Reuters in an interview on Tuesday. The AIDC is an alternative import tariff, collected by the Indian federal government for raising funds in a separate pool, and funds collected are used for building farm infrastructure. Agarwal said the ministries would select items from this list for possible tariff reduction after industry consultations. India has protected domestic industries such as autos, pharmaceuticals and farm sectors through state subsidies and high import tariffs, amid growing pressure to improve ties with the Trump administration. The list includes 32 items such as luxury cars, solar cells, yachts, sports vessels, devices used in building semiconductors, and other machinery, all of which have seen the government impose AIDC tariff of between 6.5% and 70% on imports, after reducing the basic customs duties. India's average import tariffs, including AIDC, are much higher than those of major trading partners including the United States, China and Japan, the official acknowledged. "We can't take a giant step. We have to take baby steps," Agarwal said, referencing India's strategy of gradually reducing tariffs to temporarily protect domestic industries and boost their competitiveness. TRADE BALANCE WITH THE U.S. Referring to Trump's concerns about the high U.S. trade imbalance with India, Agarwal said average tariffs on goods imported from the United States, are relatively low, and imports, especially of crude oil and liquefied natural gas, could increase this year. "Duty is not an issue in the oil sector. One (Indian) rupee per metric ton is the rate of duty on import of crude," he said, suggesting that U.S. crude could become more attractive for India as supplies from Russia face increased sanctions. India's trade surplus with the U.S., estimated at $35 billion in 2023/24, has been a highly contentious point following Trump's earlier threat of imposing tariffs over India's high levies. India's crude oil and LNG imports from the U.S., estimated at about $6.5 billion in 2023/24 fiscal year ending March, out of a total $42 billion imports, could increase after the U.S. sanctions on Russia's oil companies and China's retaliatory tariffs on energy imports from the U.S., analysts said. "We got better prices from Russia. But the situation may change," Agarwal said adding the trade imbalance could be "corrected." India's top 30 import items from the U.S., such as oil products and diamonds, all fall within low tariff category, with rates ranging from 3% on airplanes to 7.5% on petrochemicals, he said, indicating items where imports could potentially increase.
