Pakistan Daily Economy Update - 9 April

Transcription

1. Apr . 8-9, 2018 KCCI - eBulletin President promulgates ordinances: legal cover given to economic reforms package The govt. has promulgated four Presidential Ordinances to implement Economic Reforms Package (amnesty scheme) to legalize undisclosed assets and income of Pakistanis held abroad or at home, reduce rates of income tax slabs for Individuals/AOPs and mandatory filing of (foreign income and assets statement) by every resident taxpayer having foreign income or assets. In this respect, Income Tax (Amendment) Ordinance, 2018, Voluntary Declaration of Domestic Assets Ordinance, 2018, Foreign Assets (Declaration and Repatriation) Ordinance, 2018 and Protection of Economic Reforms (Amendment) Ordinance, 2018 have been issued. The package will be available for assets and income declared from April 10, 2018 to June 30, 2018. However, the reduced rates of income tax slabs for Individuals/AOPs would be applicable from July 1, 2018. BR - Mon. Income tax relaxations to cause PKR 90Bn losses The massive increase in income tax exemption slab and lowering of maximum tax rate to 15% from 35% for salaried and non-salaried individuals will likely cause around PKR 90Bn losses to the national kitty. The proposed move under the govt.’s economic package is likely to wipe out nearly 521,000 taxpayers from the tax net. The govt. has announced unprecedented relief in income tax rates to super rich people. Internationally, highest tax rates exist in the income tax law for those people who earn more. But the most surprising move was to enhance exemption limit to PKR 1.2Mn from the existing PKR 0.4Mn. BR – Sun. Prime Minister defends ‘revolutionary tax reforms’ PM Abbasi has said that recently announced 'revolutionary tax reforms' would bring in record revenues and those criticizing the initiative should first make their last year's tax details public. While inaugurating infrastructure projects, the PM said that these tax reforms would incentivize people to join course of national development by paying taxes. He said the tax reforms are meant to shift burden of indirect taxes from the poor to those who are not paying taxes despite earning millions. BR – Sun. FBR to offset exit of 0.52Mn returns filers after tax exemption The FBR is all set to offset a possible exit of 0.52Mn returns filers from the net after the implementation of new tax slabs for salaried class and individuals from 1st Jul’18, by focusing on withholding tax transactions made by non-filers of income tax returns. Though individuals with annual income below PKR 1.2Mn will not be required to file returns, they would need to file returns in order to make adjustment on withholding tax deductions on electricity and telephone bills and claim refunds. Consequently, there will be no impact rather an increase in number of returns filers. In the new tax scheme, said only return filers would be entitled to purchase properties amounting above PKR 4Mn rupees, while individuals on active taxpayers list would be able to hold foreign currency accounts only. The News-Sun. Budget proposals: PSX suggests four tiers of holding periods for CGT collection Pakistan Stock Exchange (PSX) has strongly proposed Finance Ministry to implement four tiers of holding periods for collection of Capital Gains Tax (CGT) on securities, rationalization of taxation regime for brokers, exemption to foreigners from collection of advance CGT by the NCCPL and abolishment of tax on bonus share in budget FY19. The PSX said that the Finance Act, 2014 introduced 5% tax on the value of bonus shares. The levy, instead of generating more revenue, drastically reduced it; companies declared bonus shares amounting to PKR 19Bn prior to Jun.’14, whereas from Jul.’14 till Jan.’18, averaged annual declaration of bonus share is about PKR 4Bn. BR – Sun. Budget 2018-19: FBR officials propose new taxation measures During a day-long FBR chief commissioners' meeting to seek input of field formations on budget proposals for 2018-19, proposals were submitted for sales tax and federal excise focused on broadening the tax base, legal changes in laws and increasing the revenue collection through new measures for FY19. Field formations submitted proposals for \ eliminating tax fraud, fake and flying invoices, and plugging loopholes, if any, facilitating genuine taxpayers and making the procedures transparent. BR - Mon. LSM posts 5.52% growth in February Large scale manufacturing (LSM) sector posted a 5.52% growth in Feb’18 over Feb’17 as infrastructure uplifts boosted cement and steel off-takes, while auto demand continued to increase. PBS data showed that non-metallic mineral products, including cement (up 11.3%), automobiles (7.99%) and iron and steel products (12.6%) were the main catalysts of monthly growth in the industrial outputs. For Jul-Feb’18 period, electronics production rose 38.79%, followed by iron and steel products (30.85%) and automobiles (19.58%). Wood products recorded a 27.32% drop in production in 8MFY18, followed by leather products (7.91%) and fertilisers (7.36%). The News-Sun. Economic Indicators List of Indicators Date / Period Unit Value Change Daily 6-Apr 115.59 116.55 -0.01% 0.00% Crude (MY'18) 6-Apr 6-Apr 6-Apr 6-Apr PKR PKR Pts. $ Mn $/bbl 46,638 2.24 62.10 0.16% NM** -2.48% Gold (MY'18) Gold (10g) Local 6-Apr 6-Apr $/oz PKR 1,333.4 50,442 0.51% -0.09% Silver (MY'18) Cotton(KHI)-40 kg 6-Apr 6-Apr $/oz PKR 16.35 7,823 -0.06% 0.00% Kibor-6M 6-Apr % 6.50 $ Bn 17.80 0.00% WoW -0.85% Remittances 30-Mar FY18 Jul-Feb 18 $ Bn 12.83 YoY 3.41% Exports* Imports* Jul-Feb 18 Jul-Feb 18 $ Bn $ Bn 14.85 39.13 11.66% 17.19% USD-Interbank USD-Open MKT KSE-100 index FIPI Forex Reserves Jul-Feb 18 Trade Balance* $ Bn -24.28 Jul-Feb 18 Current Account $ Mn -10,826 Foreign Direct Inv. $ Bn 1.94 Jul-Feb 18 Jul-Jan 18 LSM Growth* % 6.33 % 3.20 Jul-Mar 18 Avg. CPI Discount Rate % 6.00 Mar-18 WoW= Sources: KCCI Research, PMEXweek , NCCPL, KSE, SBP, PBS* ** Not Meaningful on week; -20.85% -50.03% 15.64% Major Currencies 175 GBP, 8-Apr-18, 162.8 165 155 145 EUR, 8-Apr-18, 141.9 135 125 115 USD, 8-Apr-18, 115.6 105 95 Apr-17 Jul-17 GBP USD EUR Oct-17 Jan-18 Source: KCCI Research ; Oanda.com Quote of the Day "Idleness is the burial of a living man" Jeremy Taylor Chart of the Day GROWTH IN LARGE SCALE MANUFACTURING 8.00% 6.80% 7.00% 6.24% 6.00% Govt. to launch dollar-denominated bond to generate revenue The govt. is making all possible efforts to launch dollar-denominated bond for the local as well as non-resident Pakistanis. Under the Economic Reforms Package, the govt. has allowed foreign exchange repatriation on 2% payment of tax. It offered two options for repatriation; foreign asset holders can invest in 5-year 3% bonds per annum for time period of one year. The encashment of 5 year 3% bonds will be in PKR at the prevailing interbank dollar rate. The second option is that foreign currency account holders in Pakistan, who have purchased dollars through undeclared money, can also regularize them on 2% payment. It has been reported that entire amnesty scheme can generate $ 4Bn - $ 5Bn if the scheme becomes successful. The Nation - Sun. 5.00% Industry wants tax cut to make low-cost cars Auto assemblers, in their budget proposals, have proposed to reduce 1% additional duty on the cost of locally produced vehicles through amendment in SRO 1178(I) 2015 as it is negatively impacting the sector. By exempting the imports made under SRO 655(I)/2006 and SRO 656(I)/2006 from additional custom duty under SRO 1178(I)/2015, the govt. can help reduce the cost of vehicle being produced locally. They have further proposed to include imports made under SRO 655(I)/2006 as exempt from regulatory duty under SRO 1035 (I)/2017, as such exemption has also been given to various other sectors under clause of the said SRO. Furthermore, it has also been suggested to reduce the WHT rate on import of raw material, plant and machinery back from 5.5% to 1%. The Nation - Mon. 0.00% 4.00% 4.33% 4.24% 8MFY16 8MFY17 3.32% 3.00% 2.37% 2.00% 1.00% 8MFY13 8MFY14 8MFY15 8MFY18 Source: KCCI Research, PBS Disclaimer This report has been prepared by KCCI Research & Development Cell. The information contained herein have been compiled or arrived at based upon information obtained from sources believed to be reliable and in good faith. Such information has not been independently verified. icon represents the sole viewpoint of the KCCI R&D Cell, and is stated to enrich the readers' understanding of the news item. The R&D Dept. bears no responsibility for its correctness or accuracy. Contact: res@kcci.com.pk