- Govt also considering windfall tax on lofty profits in banking sector.
- Drops proposal to jack up CVT on luxury, imported vehicles.
- Govt to grant exemption on import of essential food items.
ISLAMABAD: The government may impose a flood levy ranging from 1-3% on all imports through a presidential ordinance keeping in consideration a waiver to basic food items and raw medicine material imports, The News reported Wednesday.
The government is also considering a windfall tax on lofty profits in the banking sector. The profit earned by the banks in the form of alleged currency manipulation is being bifurcated by the taxation authorities with normal income to impose the additional tax.
Another proposal to jack up the capital value tax (CVT) on luxury and imported vehicles has been dropped by the government.
The International Monetary Fund (IMF) also opposed the amnesty scheme for the regularisation of vehicles registered in Federally Administered Tribal Areas (FATA) and Provincially Administered Tribal Areas (PATA) since 2018, when these districts merged into Khyber Pakhtunkhwa.
Official sources confirmed to The News that the State Bank of Pakistan (SBP) had reported lofty profits of Rs100 billion by commercial banks in the first three quarters (Jan–Sept) of the current calendar year 2022, compared to Rs37 billion in the same period of the last year 2021.
The SBP data showed that the banks had earned Rs63 billion in extra profits. So a windfall tax is under consideration to get the due share for the national exchequer.
Citing the example of energy companies that earned lofty profits in the aftermath of the Russia and Ukraine war, the Western world slapped a windfall tax and the same happened in the case of the banking sector in Pakistan.
“We are also considering the windfall tax cautiously,” said one official, who added that the litigation on the super tax in the superior judiciary was underway, so the government wanted to move ahead in a manner that it might not be struck down by the courts.
“There is also a need to ascertain the exact level of windfall profits after excluding the normal increase in profits of banks,” said the official, who added that it would be hard to declare the whole extra profit of Rs63 billion as part of the windfall profit of banks.
There is a need to calculate the windfall profits of banks carefully, so it is assumed that the commercial banks had earned an extra profit in the range of Rs50 billion, and this amount should be taxed as windfall tax.
There are different rates under consideration, and the government will finalise it if this proposal gets approval from all relevant forums in the coming few days.
The government is likely to issue an ordinance to that effect to appease the IMF and pave the way for a staff-level agreement to be reached within the next month.
Finance Minister Ishaq Dar is expected to meet the IMF delegation on the sidelines of a donors’ conference, which will be held in Geneva on January 9, 2023, to rally financial support for the flood-affected areas in Pakistan.
On the proposed flood levy, the sources said that the government would grant an exemption on the import of onions, tomatoes and other essential food items, as well as medicines and their raw materials, but a levy in the range of 1-3% will be slapped on all other imported items.
This revenue measure will fetch Rs60 billion in the remaining six months of the current fiscal year.
The Federal Board of Revenue of Pakistan has been currently busy identifying those sectors that had earned lofty profits in the last fiscal year like banking and beverage.
It is yet to be seen how the government decides to take action to fetch the additional tax and non-tax revenues to satisfy the IMF and revive the stalled programme.
PKR on track to become top-performing currency this month: Bloomberg
- Pakistani currency rose around 6% this month against dollar.
- Authorities curb leakages happening through illegal channels.
- Crackdown on illegal dollar traders helps local currency.
The Pakistani rupee is on track to become the top performer globally in September as the caretaker government continues its crackdown on illegal dollar trade, Bloomberg reported Thursday.
The local currency rose around 6% this month against the dollar — an amazing feat despite the Thai baht and South Korean won tumbling against the greenback.
Major currencies lost ground against the dollar on speculations that the US interest rates will stay elevated for longer.
The rupee increased 0.1% to 287.95 per dollar on Thursday, after sliding to a record low of about 307 this month. Pakistan’s currency market will remain closed for the Eid Miladun Nabi holiday on Friday.
“Many leakages were happening through illegal channels of hawala and hundi trade from the open market,” Khurram Schehzad, chief executive officer of Alpha Beta Core Solutions Pvt Ltd, told Bloomberg.
“When the dollar rate reverses everybody, the hoarders, the exporters who are holding their export proceeds, start selling their dollars,” Schehzad said.
The interim rulers have intensified efforts by launching a crackdown on people involved in the illegal dollar trade, allowing the currency to gain some lost ground.
The Federal Investigation Agency, Bloomberg reported, conducted raids across the country and security officials in plainclothes were deployed at money exchanges to monitor dollar sales as part of the crackdown.
Caretaker Prime Minister Anwaar-ul-Haq Kakar this week said the rupee’s gain is “fostering optimism for stability.”
For its part, the State Bank of Pakistan raised the capital requirements of smaller exchange companies and ordered large banks to open their own exchange companies to make the retail foreign exchange market more transparent and easier to monitor.
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inDrive now available in five more Pakistani cities
KARACHI: inDrive, a popular ride-hailing service in Pakistan, has now expanded its network to five more cities across Pakistan including Larkana, Kāmoke, Sheikhupura, Hafizabad, and Okara.
In a statement issued by the transport company, the inclusion of these cities reflects inDrive’s dedication to bringing innovative transportation options to both urban centres and suburban areas.
Speaking about the expansion, Senior Business Representative at inDrive Hasan Qureshi said: “We are excited to extend the convenience and reliability of inDrive to residents of Larkana, Kāmoke, Sheikhupura, Hafizabad, and Okara.”
“Our mission is to redefine transportation by providing safe, affordable, and accessible rides to everyone. With this expansion, we are not only enhancing the commuting experience but also contributing to the economic growth and empowerment of these communities.”
PR Manager Sidra Kiran said that their new service offers city residents the convenience of accessing transport from their homes, eliminating the need to search for it.
“Both drivers and passengers stand to gain significant benefits, including time-saving and the elimination of challenges associated with street hailing. This service addresses issues such as locating rides during odd hours like early mornings or late nights,” she stated.
She further added: “inDrive ride-hailing presents numerous benefits to drivers in small cities, including flexible opportunities, reduced unemployment, supplemental income, enhanced community connection, and positive contributions to the local economy.”
The launch of the company in these cities would benefit both riders and driver-partners.
inDrive further said that it remains committed to upholding the highest standards of safety, affordability, customer service, and technological innovation.
inDrive is Pakistan’s premier ride-hailing service and is revolutionising the way people travel. With a commitment to providing safe, affordable, and reliable transportation.
The company allowed riders to connect with nearby drivers with its app.
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