[ Falling crude: PRGMEA demands reduction in oil prices ]
[ Recent dollar gains against Euro hurt exports to EU countries ]
[ Bank levy: applicability of concessionary rate notified ]
[ DI&I IR Karachi prepares report: unscrupulous persons find it quite easy to circumvent CREST ]
[ Delay in release of refund claims: FBR accused of hampering growth of productive sectors ]
Falling crude: PRGMEA demands reduction in oil prices [ top ]
The Express Tribune, February 03, 2016
KARACHI: Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) Chairman Shaikh Mohammad Shafiq has urged the government to transfer the whole benefit of reduction in crude oil prices to the industry.
“The main reason the industry has not been doing well is because of high cost of production,” said Shafiq in a statement.
He said that the lowering oil prices will boost the industrial production and competitiveness.
Shafiq has expressed grave concern over Pakistan’s annual consumer inflation rate increasing to 3.32% in January from 3.19% in December, while on the other hand, total liquid foreign exchange reserves held by Pakistan have declined by $109 million to $20.50 billion.
Shafiq strongly recommended the government to take drastic steps for enhancing exports and addressing the problems of the industrial sector on top priority basis.
Recent dollar gains against Euro hurt exports to EU countries [ top ]
Business Recorder, February 03, 2016
Pakistani exports to EU countries are 60 per cent in Euros and 40 per cent in dollars, according to Pakistani exporters, and thus a strong dollar vis a vis the Euro does negatively impact on 40 percent of our exports. Chairman Pakistan apparel forum Javed Balwani and chief co-ordinator and former central chairman of Pakistan Readymade Garments Manufacturers Association (PRGMEA) Ejaz A Khokar told this correspondent, "We are struggling against both internal and external factors and recent gain of dollar against Euro from 1.34 to 1.7 has been a blow for Pakistan's exports to EU countries".
Balwani accused the government of indifference to the ever rising input costs that are hurting exports, "We (trade bodies) met with the Prime Minister in September 2015 and not only informed him of the problems hurting exports but also suggested measures to increase exports" he said; the Prime Minister reportedly assured them that a level playing field would be provided to them against regional countries by resolving their problems in a week's time but since then it is six months and not a single issue has been addressed.
As long as the prime minister does not take ownership exports would continue to suffer, said Khokhar. There is a potential to increase exports of apparel sector to $7 billion from existing level of $4.5 billion if the industry was provided a level playing field. He added that exports of apparel sector were $4.3 billion when the country was granted GSP plus status in January 2014.
Khokhar attributed over valued exchange rate, non serious attitude of the government towards textile exports, liquidity problems owing to blockage of refunds by the Federal Board of Revenue (FBR) as well as high input costs as primary factors making the industry unable to compete with regional countries. "We have also lost credibility as reliable suppliers because industry has been unable to deliver orders on time due to the energy crisis" he said and added that the government has been requested time and again to ensure supply of gas to the processing mills to help them meet the orders on time but to no avail.
He said the government seriousness is evident from the fact that there is no minister of textile industry who would listen to the genuine grievances of an industry which contributes 57 per cent to total exports for the last one year. Javed Balwani said all these factors have made the country's export sector uncompetitive in the global market including EU countries compared to other regional players. He added that increase in exports will help government mobilise revenue in the form of taxes, and bring in foreign exchange reserves, and create employment opportunities.
Balwani also accused the government of having no realisation that Pakistani exports suffered $1.75 billion decline during the last six months. He added that the increase in exports would help the government get away from expensive borrowing but this does not seem the government's priority.
Bank levy: applicability of concessionary rate notified [ top ]
Business Recorder, February 03, 2016
The Federal Board of Revenue (FBR) has notified applicability of concessionary rate of the 0.3 percent withholding tax on banking transactions of non-filers till February 29, 2016. According to a notification issued by FBR here on Tuesday, in exercise of the powers conferred by proviso under Division XXI of Part IV of the First Schedule to the Income Tax Ordinance, 2001, the federal government has amended the rate specified under Division XXI of Part IV of the First Schedule to 0.3 percent w.e.f. first day of February, 2016 to February 29, 2016
DI&I IR Karachi prepares report: unscrupulous persons find it quite easy to circumvent CREST [ top ]
Business Recorder, February 03, 2016
The Federal Board of Revenue (FBR) computer system of verifying sales tax invoices for issuing refunds has been defeated by unscrupulous registered persons through software designed to bypass computerised risk-based evaluation of sales tax (CREST) system to utilise fake/flying inputs to cause revenue loss to the tune of billions.
This has been disclosed in a report prepared by Directorate of Intelligence & Investigation Inland Revenue Karachi which has detected safety software designed to defeat CREST software for using fake/flying inputs.
In this regard, a report (pre-emptive campaign against misuse of input tax - revenue safeguarded) of the directorate of intelligence was submitted to the Director General Directorate of I&I IR here on Tuesday. The directorate of Karachi has also shared techniques used to defeat CREST system and also suggested effective measures to check such kinds of frauds to prevent revenue loss of billions.
As per report, the directorate has noted that during last few years a number of unscrupulous persons are using fake/bogus/flying input tax to deprive the exchequer of billions of rupees using their skills to deceive the system including safety software designed as check valves. In recent past a number of cases were identified and reported by the Directorate whereby CREST and other systems were defeated to generate and to utilise the fake/flying inputs. In order to pre-empt such huge losses to exchequer, a comprehensive campaign has been launched against persons who are deceiving the system in following manners: They are declaring self-generated input tax through various volley invoices among different cities/ RTOs, at the initial end of which fake invoices are generated. Secondly, they are utilising fake input tax through fake self-generated withholding tax. Thirdly, such persons are issuing invoices irrelevant to goods imported (importers only). Fourthly, they are accumulating unadjusted input tax against non taxable sales to generate invoices for facilitation of other registered persons etc.
In the said scenario, 22 registered persons have so far been identified as persons engaged in tax fraud in the manner specified above, involving sales tax of Rs 645.668 million. Their cases were sent to concern Regional Tax Offices for proceedings of blacklisting provided under Sales Tax Act, 1990. Regional Tax Offices having jurisdiction have, therefore, started proceedings by suspension of registration.
It is pertinent to mention here that this pre-emptive exercise is worth much more than the revenue indicated above as it prevents the future revenue loss of billions of rupees which otherwise would have been caused by the unscrupulous persons mentioned above. This is a tedious exercise requiring data analysis and field verification, however, the Directorate of Karachi with its meagre resources is striving hard and putting every effort to identify other persons involved in the same fraudulent practices which such persons keep exploring. Expectedly over billions of rupees have and will be safeguarded through this pre-emptive campaign. Further progress/outcome will be communicated in due course of time, the report added.
Delay in release of refund claims: FBR accused of hampering growth of productive sectors [ top ]
Business Recorder, February 02, 2016
The business community of Southern Punjab has urged the Federal Finance Minister Ishaq Dar and the Federal Board of Revenue to immediately release refund claims as the businesses are facing serious shortage of capital to run their businesses.
These refunds, according to the government's commitment, were not cleared till December 31st, 2015.President of Multan Chamber of Commerce Fareed Mughis Sheikh in a statement on Monday said the Federal Board of Revenue is hampering growth of the most productive sectors by denying the exporters and manufacturers their right of refund of sales tax and income tax. The delay in release of huge funds that runs into billions has triggered serious liquidity crunch for the exporters and manufacturers that might lead to closure of several industrial units, he said.
The authorities concerned should take realistic view of the matter and allow the refunds of sales tax and income tax to exporters and manufacturers at the earliest, who are facing severe hardships. The process to get refunds is so lengthy and cumbersome that sometimes takes months for a manufacturer or exporter to get his own money refunded, he added.
Exporters are already facing financial crunch due to devaluation of euro while delay in refund of sales tax and income tax claims is adding fuel to the fire. MCCI chief urged the FBR chairman to look into the matter and ensure early release of sales tax and income tax refunds.
The businessmen have now started feeling the pinch as the businesses were already in deep troubles and experiencing toughest times because of multiple internal and external challenges including an acute shortage of electricity and gas. And now the delay in release of their own money is adding to their miseries. It is a matter of concern that FBR machinery is using delaying tactics and creating hurdles for the business doing people, he added.