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Business Recorder
29-05-2025
- Business
- Business Recorder
Packaged milk and infant milks: Experts, stakeholders for reversing 18pc ST
ISLAMABAD: The experts and stakeholders from government, industry, and research institutions on Tuesday called for reversing 18 percent sales tax on packaged milk and infant milks in budget (2025-26). The pre-budget seminar has concluded for immediate reforms in the taxation regime affecting Pakistan's dairy industry to promote formalization, nutrition and growth. The Sustainable Development Policy Institute (SDPI) organized a focused policy dialogue titled 'Enabling Dairy Sector Transformation through Smart Taxation'. The Federal Board of Revenue (FBR) is finalizing proposals on dairy sector. Through the Finance Act 2024 the government withdrew zero-rating (Serial no.12(xvii) and 17 of the Fifth Schedule of the Sales Tax Act 1990) and imposed 18% GST on locally produced infant formula, baby food and fortified child nutrition products. Before that the locally produced preparations suitable for infants were eligible for zero-rating if the cost was within a threshold defined by the government. The FBR is reviewing this budget proposal to restore zero-rating on infant milks. The session, moderated by Zainab Naeem and organized as part of the Sustainable Development Policy Institute's (SDPI) pre-budget consultation series, aimed to finalize a joint statement and action plan to formalize the largely informal dairy sector through rational tax policies. In his opening remarks, Dr. Abid Qaiyum Suleri, Executive Director of SDPI, highlighted that despite contributing significantly to economic activity, over 90% of Pakistan's dairy sector remains undocumented and untaxed. 'Documentation of the economy is crucial not just for fiscal stability but also for tackling malnutrition and ensuring food safety,' said Dr. Suleri. He emphasized that the current tax policy – particularly the 18% GST on packaged milk – disincentivizes the formal sector and undermines both public health and economic development. Dr. Umar Farooq, Research Associate at SDPI, presented key findings from a policy brief. He revealed that the sales tax hike led to a 20% drop in packaged milk sales and closure of over 500 formal milk processing units, redirecting Rs1.3 trillion in revenue to the informal sector. 'This is a fiscal miscalculation. Globally, milk is taxed at an average of just 6%. Pakistan's 18% GST on packaged milk is a policy outlier that compromises health, nutrition, and livelihoods,' he stated. Representing the private sector, Muhammad Nasir of Friesland Campina Engro Pakistan stressed the sector's socio-economic importance, especially in rural areas. 'Dairy acts as a social safety net, yet our productivity remains among the world's lowest,' he said. Nasir also flagged Pakistan's alarming 40% stunting rate and warned that increased taxation on safe milk could worsen national nutrition indicators. Aatekah Mir from Nestlé Pakistan explained that the sales tax freeze has halted investment in milk conversion infrastructure. 'This tax was criticized across political lines,' she noted, adding that Nestlé and others are fully aligned with the SDPI's policy recommendations. Dr. Shehzad Amin, CEO of the Pakistan Dairy Association, called for a rational and uniform tax regime. 'No country taxes milk at 18% – the highest global rate is 9%. Safe milk is not a luxury, it's a right,' he asserted. He warned that shifting consumption from packaged to loose milk due to pricing pressures could severely impact public health and contribute to a stunted generation in the next five years. Dr Muhammad Anjum Iqbal, Animal Nutritionist at the Ministry of National Food Security and Research urged the government to incentivize quality milk production, highlighting the need for improving animal health, diet, and environment. During the questions and answers session, the experts emphasized the importance of pasteurization, certification, and infrastructure. Muhammad Nasir from Engro Pakistan reiterated that only registered and tested products were certified, and that modern safety protocols like those in the Netherlands were needed to combat zoonotic disease risks. Dr Shehzad Amin pointed out that 96% of milk samples from the informal sector are adulterated, compared to the formal sector's strict testing standards. 'Bringing the informal sector into the tax net could improve both revenue and milk quality,' he said. In conclusion, stakeholders unanimously called for immediate reduction of GST on packaged milk to 5%, recognition of milk as a nutrition-sensitive commodity, alignment of fiscal policies with health and nutrition goals, and promotion and protection of the formal dairy sector through public awareness and infrastructure development. Copyright Business Recorder, 2025
Business Recorder
20-05-2025
- Business
- Business Recorder
K-Electric condemns attack on IBC in Defence
KARACHI: Miscreants from the P&T Colony surrounded the IBC, hurled bricks to shatter its windows, and forced staff including women to seek refuge inside the office premises. K-Electric will not tolerate its staff being held hostage at the behest of a few miscreants who want their dues cleared illegally,' the spokesperson added. 'Pending dues from defaulters in P&T Colony have already exceeded Rs520 million. KE is pursuing strict legal action against these miscreants, and appeals to law-enforcement agencies to support the company recover its due share of payments and curb electricity theft from the area. In a separate incident that involved a protest by residents of Ibrahim Hyderi, electricity supply was maintained through an alternative source despite K-Electric bearing a loss of 80-90% on its sent-out units and payable dues from that area crossing Rs1.3 billion. 'KE reiterates that providing free electricity is not possible, and urges residents to pay their electricity dues on time.' 'It is pertinent to mention that 70% of KE's serviced areas are exempt from load-shedding. The remaining 30% of the network faces challenges such as electricity theft and non-payment of bills. In these areas, load-shedding schedules are implemented based on the level of theft and non-payment. The schedule is publicly available on K-Electric's website.' Copyright Business Recorder, 2025
Business Recorder
19-05-2025
- Business
- Business Recorder
‘Violation of Petroleum Rules': PMO seeks detailed report from Petroleum Division
ISLAMABAD: Prime Minister's Office has sought a detailed report from Petroleum Division regarding alleged violation of Petroleum Rules by Frontier Holdings Limited (FHL) and SPUD Energy PTY Limited. According to documents, PM Office in a letter dated May 05, 2025 carrying subject 'Urgent Action Required Violation of Petroleum Rules by Frontier Holdings Limited (FHL) and SPUD Energy PTY Limited' asked the Petroleum Division to furnish a detailed report. And, following the PM Office took notice of the alleged violation of the Pakistan Petroleum Rules, 2001, in the disposition of controlling shares of two petroleum exploration firms—SPUD Energy Pty Ltd and Frontier Holdings Limited (FHL), the Director General Petroleum Concession swung into action and advised the Chief Executive Officer of FHL to submit a report in the matter to proceed further in accordance with applicable rules. Earlier, Transparency International Pakistan (TIP) requested the Prime Minister's Office to initiate an investigation into the alleged violation of the Pakistan Petroleum Rules, 2001, in the disposition of controlling shares of two petroleum exploration firms—SPUD Energy Pty Ltd and Frontier Holdings Limited (FHL). In a formal letter dated May 2, 2025, TIP raised concerns over the alleged transfer of controlling shares in the two companies without prior government approval, a move that if confirmed, would violate Rule 69(d) of the Pakistan Petroleum (Exploration and Production) Rules, 2001. According to Rule 69(d), companies must obtain prior consent from the government before proceeding with any disposition of controlling interests. The rule states: 'Without the prior consent of the Government, there shall be no disposition of the share capital of the holder or its parent company in consequence of which any person who, prior to that disposition, had effective control of the holder or its parent company ceases to have such effective control.' TIP stated that SPUD and FHL are linked to Jura Energy Corporation, which recently saw a controlling interest shift from Phoenix Holdings Ltd to IDL Investments Ltd. It alleged that this transaction occurred secretly, without notifying or securing consent from the Petroleum Division. The watchdog also cited past regulatory violations by SPUD and FHL, including a government-ordered recovery of Rs1.3 billion in unpaid royalties. TIP warned that failure to act on this latest development could set a dangerous precedent, undermine regulatory authority, and compromise Pakistan's energy sovereignty. Reportedly in 2023, Prime Minister Shehbaz Sharif directed the petroleum division to recover an outstanding royalty amount of Rs 1.13 billion from two oil and gas firms, Spud Energy and Frontier Holdings Limited (FHL). The PM's office, in a letter dated January 20, 2023, to the secretary petroleum division, said that 'it has been desired that the petroleum division shall ensure recovery of the outstanding amount within two weeks and submit a compliance report.' In the letter which was addressed to the managing director, Sui Southern Gas Company Limited (SSGC), Fazal Abbas, the petroleum division's financial analyst, advised the company to stop the payments of Spud Energy and FHL. He said the outstanding royalty should be deposited in the government treasury. Copyright Business Recorder, 2025
Express Tribune
10-05-2025
- Business
- Express Tribune
NA panel slams 'brutal' tax law
A parliamentary committee on Friday expressed serious reservations over the recently promulgated the Tax Laws (Amendment) Ordinance, 2025, declaring it a brutal measure. A meeting of the National Assembly's Standing Committee on Finance was held at the Parliament House under the chairmanship of Syed Naveed Qamar. During the meeting, members belonging to the PPP expressed reservations over the presidential decree. Commenting on it, Qamar noted that the tax ordinance was issued just a day before the National Assembly session. "This is highly inappropriate. What was the emergency that required issuing a tax ordinance before the June budget?" he asked. Federal Board of Revenue (FBR) Chairman Rashid Mahmood Langrial stated that while sales tax law allows production monitoring, this provision was absent in income tax. He claimed that poultry companies were involved in tax evasion, noting that the cost of producing a chick is Rs65 to Rs75, while companies are making Rs100 profit per chick daily. "A company had been paying Rs1.3 billion in annual tax but actually it owed Rs10 billion. After action was taken against the company, chicken prices began to decrease," he stated. He said income tax returns of similar companies are fraudulent. "The presidential ordinance grants the FBR authority to monitor production and empowers it to recover taxes after orders from the Commissioner Appeals, Assessment Officer, and Tribunal,' he said. The chairman revealed that tax evasion in the tobacco sector is estimated between Rs250 to Rs300 billion and that provincial police and administration will be given powers to catch tax evaders. However, he admitted the ordinance will not yield substantial recovery, estimating only a 5% to 10% increase or about Rs30 billion in additional revenue. He said both the Federal Cabinet and the president had made an informed decision in issuing the ordinance. Naveed Qamar warned that police officers may abandon their regular duties to pursue tax enforcement.
Business Recorder
10-05-2025
- Business
- Business Recorder
Tobacco, poultry sectors accused of evading Rs400bn tax
ISLAMABAD: Chairman of the Federal Board of Revenue (FBR) Rashid Mahmood Langrial, Friday, disclosed massive tax evasion in the tobacco and poultry sectors to the tune of nearly Rs400 billion, reflecting huge tax gap in country's economy. During a meeting of the National Assembly's Standing Committee on Finance on Friday, the FBR chairman disclosed that out of every 10 trucks of smuggled/ illicit cigarettes, only one is confiscated due to limited manpower of the tax machinery. The new powers to provinces would help in checking illicit cigarettes at the retail level with the help of provincial law enforcement agencies. PM Shehbaz orders crackdown on tax evasion, under-invoicing About the tobacco sector, the FBR chairman stated that an estimated tax evasion of around Rs300 billion is taking place in tobacco sector. He stated that any cigarette without the mandatory stamp is illegal and indicated that the FBR would seek the assistance of provincial law enforcement agencies to combat the trade of illegal cigarettes. The FBR is devising a SOP for enforcement with the help of law enforcement agencies. The cost of non-compliance or not paying taxes will increase for tobacco sector and at least 10 percent impact would be seen after enforcement at provincial level. The Chairman of the Standing Committee, Syed Naveed Qamar, expressed concern that the new authority granted by the ordinance could lead to increased harassment. The FBR chairman stated that poultry sector, which was liable to pay Rs10 billion in taxes, was only contributing Rs1.3 billion. He pointed out the significant profit margins in the sector, where a chick costing Rs70-80 is sold for as high as Rs180. He attributed this underpayment to the absence of cost accounting in income tax returns within the poultry industry. The FBR's market intelligence indicated widespread issues in certain sectors, including poultry, where daily production ranges from 800,000-900,000 chicks. The lack of cost accounting led to substantial under-collection of taxes. The chairman noted that when the FBR took action, the sales prices declared by the poultry sector were altered. Officials estimated that the outstanding dues from the poultry sector over the past five years could amount to Rs150 billion, with annual liabilities reaching Rs30 billion. Copyright Business Recorder, 2025
