Pakistan

Tax exemptions of Rs50b defy IMF | The Express Tribune

Published

6 مہینے ago

مارچ 29, 2024

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ISLAMABAD:

Pakistan has granted a Rs50 billion annual income tax exemption to two government departments, violating the International Monetary Fund (IMF) programme and its own tax law. This decision faced resistance from tax authorities despite being approved through two Acts of Parliament.

Official documents show that the Pakistan Civil Aviation Authority (PCCA) and Pakistan Airports Authority (PAA) were granted income tax exemptions through two Acts of Parliament weeks after the approval of the $3 billion Stand-By Arrangement (SBA).

The annual cost of the income tax exemption for this fiscal year alone is Rs50 billion, as per the documents. Sources reveal that the Federal Board of Revenue (FBR) made efforts to stop the tax exemption but encountered resistance from the Ministry of Law and Justice and other concerned authorities. These exemptions were not granted under the Income Tax Ordinance of 2001, violating section 54 of the Ordinance.

The Ministry of Law has supported the Civil Aviation Authority’s contention for the Rs50 billion income tax exemption.

The parliament approved two new laws, the Pakistan Civil Aviation Authority Act, 2023, and the Pakistan Airport Authority Act, 2023, in August last year, weeks after the IMF Executive Board approved the $3 billion bailout package. Pakistan cannot grant any income tax exemption until it is discussed and approved by the IMF.

Sources mention that the FBR and the Ministry of Finance were not in favour of the income tax exemption, with the FBR attempting to recover the amount from the Civil Aviation Authority.

The IMF board is scheduled to meet late next month to approve the staff level agreement and release the remaining loan amount of $1.1 billion. The government is also in the process of seeking yet another bailout package.

Documents indicate that the FBR believed the exemption was not available to both authorities as it was not provided under the Income Tax Ordinance, 2001. Section 54 bars any such exemption to any entity provided under any other law.

Section 3 of the Pakistan Civil Aviation Authority Act, 2023, provides that the Pakistan Civil Aviation Authority established under the Pakistan Civil Aviation Authority Ordinance, 1982, shall be deemed the authority established for the purposes of the Pakistan Civil Aviation Authority Act, 2023.

According to the Pakistan Civil Aviation Act 2023, “notwithstanding anything contained in the Income Tax Act, 2001, or any other law relating to income tax, super tax, sales tax on services, or property tax, the authority shall be exempted from paying any such tax on its income, services, profits, gains, or property.”

According to the Airports Act, “notwithstanding anything contained in the Income Tax Act, 2001, or any other law relating to income tax, super tax, sales tax on services, or property tax, the Authority shall be exempted from paying any such tax on its income services, profits, gains, or property.”

The Ministry of Law and Justice has backed the CAA’s claim for Rs50 billion income tax exemption.

This issue is a classic case of competing non-obstante clauses; two conflicting sets of legislation need to be interpreted in a purposive manner, and all efforts must be made to harmonise and reconcile two conflicting enactments. If the above is impossible to achieve, a non-obstante clause becomes effective, according to the Law Ministry opinion.

“In the opinion of this Division, the intent of the legislature as envisaged in section 34 of the Pakistan Civil Aviation Act, 2023, and section 38 of the Pakistan Airports Authority Act, 2023, is too clear to ignore,” according to the Law Ministry’s written opinion.

It adds that the legislature has categorically ousted the operation of the Income Tax Ordinance positively by naming its own former enactment and then restricting its operation in regards to the two special laws mentioned above.

“Henceforth, it is the opinion of this (Law) Division that the non-obstante clauses as provided in sections 34 and 38 of the PCA and PAA 2023 would, in light of the Judicial Pronouncement quoted above, by virtue of being enacted latter in time, override the provisions of section 54 of the ITO Ordinance, 2001.”

However, the FBR has not accepted the Law Ministry’s opinion. The tax authorities are facing an uphill task to collect Rs879 billion from the taxpayers in the month of March. The State Bank of Pakistan has instructed the commercial banks to keep their branches open beyond scheduled timing to facilitate tax payments.

The FBR is of the view that it differs with the Ministry of Law and Justice on the grounds that the Income Tax Ordinance is the “only special law” dealing with taxation. Therefore, for the purposes of taxation, neither the Pakistan Civil Aviation Act, 2023, nor the Pakistan Airport Authority Act, 2023, are special laws, it added.

Published in The Express Tribune, March 29^th, 2024.

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Related Topics:defy Economy exemptions Express IMF latest Pakistan Rs50b tax Tribune

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Pakistan

Pakistan, Russia plan to establish new steel mill in Karachi – Pakistan Observer

Published

16 گھنٹے ago

ستمبر 19, 2024

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ISLAMABAD – The government is considering a proposal to establish a new steel mill in Karachi with Russian cooperation and the both countries agreed to form working groups to move forward on the project.

In this regard, Deputy Minister of Industry and Trade Russian Federation Aleksei Gruzdev met with Minister for Industries, Production and National Food Security Rana Tanveer Hussain.

The minister informed that the government has earmarked 700 acres land of Pakistan Steel Mills for establishing a new steel mill. He said despite being blessed with considerable reserves of iron ore (estimated reserves of 1887 million tons), Pakistan is forced to import around $2.7 billion of iron and steel.

There is perpetual gap between domestic production and demand of iron and steel. For the last year, the gap is estimated at 3.1 million tons, he added.

Pakistan’s per capita steel consumption level is below even those of developing countries indicating significant growth potential over medium and long term.

He said efficiency of Pakistan’s steel industry is limited as it segmented (600 small units) and based on old inefficient technology.

The proposed site is located at Karachi and in closed to Port Qasim that reduces cost of transportation of raw materials.

Pakistan’s industrial and agricultural experts are set to visit Russia, marking a significant step in strengthening bilateral ties between the two nations. During the meeting, they emphasized on balance trade between both countries.

Rana Tanveer stressed the need for modern agricultural machinery to boost crop yields and enhance agricultural productivity.

He said the government will provides all the facilities to the Russian investor in the country. Aleksei Gruzdev said that his country will provide modern agricultural machinery to Pakistan in order to boost crop yields and enhance agricultural productivity across the country.

The meeting was attended by deputy trade representative of the Russian Federation in Pakistan Denis Nevzorov, secretary for industries and production Saif Anjum, secretary national food security and research Ali Tahir, additional secretary national food security Amir Mohyudin, deputy chief industries and production Abdul Samad and Executive Engineer PSM Engr. Muhammad Shoaib.

Pakistan

Anti-money laundering watchdog urges India to speed up prosecutions

Published

17 گھنٹے ago

ستمبر 19, 2024

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A customer hands Indian currency notes to an attendant at a fuel station in Mumbai, India on August 13, 2018. — Reuters

NEW DELHI: Financial Action Task Force (FATF), the global anti-money laundering watchdog, urged India on Thursday to accelerate its prosecutions in financial fraud cases.

FATF, a 40-member task force, in a report has rated India “moderately” effective on its parameter of “money laundering investigation and prosecution”, further adding that the country was compliant in most areas.

The task force sets global standards for national authorities cracking down on illicit funds generated through drug trafficking, illegal arms trade, cyber fraud and other serious crimes.

India became a member in 2010. In its report the task force said the country was “compliant” and “largely compliant” on 37 out of 40 parameters evaluated as part of its assessment.

The number of money laundering convictions over the last five years has been impacted by a series of constitutional challenges and by the saturation of the court system, the global watchdog said in its report on India, released on Thursday. India’s courts have huge backlogs of cases, with many left pending for years.

The Enforcement Directorate, India’s anti-money laundering agency, has seized assets of suspected financial criminals amounting to 9.3 billion euros ($10.4 billion) over the last five years but confiscation based on convictions amounted to less than $5 million, the report said.

“It is critical India addresses these issues in view of accused persons waiting for cases to be tried and prosecutions to be concluded,” it said.

The three areas in which there is partial compliance include bank scrutiny of political figures’ source of wealth and oversight of the finances of non-profit organisations and non-financial businesses and professionals.

The watchdog also noted that India faced financing threats from groups active in the Indian Illegally Occupied Jammu and Kashmir (IIOJK) region and money laundering from illegal activities related to corruption, drug trafficking and cyber crime.

The statement added that India needs to focus on concluding the prosecutions and properly sanction such financiers.

Pakistan

Pakistan, Russia plan free Trade Agreement with Eurasian Economic Union – Pakistan Observer

Published

18 گھنٹے ago

ستمبر 19, 2024

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ISLAMABAD – Pakistan and Russia mulled stern measures to boost economic ties with new trade and energy initiatives, as the Russian Deputy Prime Minister arrived in Islamabad to discuss several key areas of collaboration.

In a press conference with Pakistan’s Deputy PM Dar Ishaq Dar, both sides decide to explore bilateral trade between two countries reached $1 billion last year and highlighted the need to address logistical and other challenges to further enhance trade relations.

Dar stressed that energy cooperation with Russia holds significant promise and expressed Islamabad’s interest to explore more avenues. He underscored importance of developing connectivity projects, including rail and road networks, to strengthen economic ties not just between Pakistan and Russia but extending to other regions as well.

Deputy PM emphasized Pakistan’s view of Russia as a crucial player in West, South, and Central Asia, and reaffirmed that strengthening ties with Russia remains a top priority in Pakistan’s foreign policy. He reiterated Pakistan’s commitment to working with Russia to promote peace and stability in Afghanistan.

In his remarks, he revealed discussions about potential collaboration between Pakistan and the Eurasian Economic Union, which includes Armenia, Belarus, Kazakhstan, Caucasia, and Russia. The two sides explored the possibilities for implementing a free trade agreement involving these five countries and plan to continue discussions to finalize the agreement.

Russian Minister also pointed out that the upcoming inter-governmental commission meeting in Russia will serve as a platform to further enhance trade and economic relations. He further highlighted that both nations share aligned goals within the Shanghai Cooperation Organization (SCO), including in areas such as connectivity, climate action, food security, and energy transition.

Pakistan

Easypaisa introduces Rs99 fee for Biometric, and account upgradation? – Pakistan Observer

Published

20 گھنٹے ago

ستمبر 19, 2024

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EasyPaisa, mobile wallet used by over 9.5 million Pakistanis, lately added Rs99 charges for failed biometric verification with NADRA and account upgradation a fee that lacks clear regulatory justification. Users reported multiple deductions from their accounts after unsuccessful attempts to match their fingerprints.

A recent notification received by Easypaisa users said “Your fingerprints could not be matched with your ID Card from NADRA records”, asking the person to scan fingerprints.

It mentioned you can get your account biometrically verified at your nearest retailer, and that a fee of Rs. 99 will be charges from your account for biometric verfication.

Easypaisa Introduces Rs99 Fee For Biometric And Account Upgradation

The recent move raised question and Easypaisa is yet to share an official statement on the mettter of introducing new charges.

In 2023, the mobile wallet company imposed a monthly SMS alert fee of Rs15, which raised concerns among its vast users. for the unversed, Pakistan’s central bank directed all banks and microbanks to share free SMS and email alerts.