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Govt may slap flood levy ranging from 1-3% on all imports

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  • 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.

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The inaugural flight of Azerbaijan Airlines is between Baku and Karachi.

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The national airline of Azerbaijan launched direct flights from Baku to Karachi today. There will be two weekly flights on this route, on Thursdays and Sundays.

The first flight will land in Karachi, and Azerbaijan’s ambassador, Khazar Farhadov, will be there to greet it.

This evening also marks the departure of the inaugural flight from Karachi to Baku, in addition to the arrival of the flight from Baku.

Azerbaijan Airlines said last month that it would be growing its network and flight operations in Pakistan.

Aviation insiders have verified that Azerbaijan Airlines is preparing to launch service to Karachi in the coming month of April.

In addition to its current services in Islamabad and Lahore, the airline plans to launch its Karachi route on April 18, with the inaugural flight anticipated to depart on that date.

Azerbaijan Airlines has been given permission to operate flights on the Karachi route, according to sources within the Civil Aviation Authority (CAA).

Following a bilateral agreement between the two nations, Azerbaijan Airlines has been given permission to extend its operations in Pakistan.

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Fly Jinnah opens a new route internationally.

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Two weekly flights will be the starting frequency of the new route, which will connect the two cities.

According to a representative for Fly Jinnah, the company is pleased to announce the opening of a third international route from Islamabad to Muscat, the capital city of Oman, marking another significant milestone after the successful debut of flights from Islamabad and Lahore to Sharjah.

According to him, this development is in line with our goal of giving our clients more options for reasonably priced, value-driven local and international air travel.

The airline serves five main cities in Pakistan: Karachi, Lahore, Islamabad, Peshawar, and Quetta. Its fleet consists of five Airbus A320 aircraft, all of which are contemporary.

In addition to the current flight path to Sharjah, United Arab Emirates, this new route expands Fly Jinnah’s network of foreign destinations.

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Tajir Dost app: traders don’t seem interested in registering

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To tax retailers in Pakistan, the Tajir Dost app was released. The sources stated that the government hopes to tax 3.5 million merchants through the app.

Ajmal Baloch, the president of All-Pakistan Anjuman-e-Tajran, stated that he made reservations with FBR on the SRO within a week.

The Federal Board of Revenue (FBR), according to him, cannot be a “Tajir Dost” because of its unethical actions.

Baloch believed that since electricity bills allow traders to pay a predetermined advance income tax, further taxes are unnecessary.

The trader, according to him, is already paying thirteen different kinds of taxes on the commercial meter. “A trader already pays between Rs. 15,000 and Rs. 20,000 in taxes annually, but you are requesting Rs. 1,200 per month in taxes.”

Mr. Ajmal summoned representatives of the Federal Board of Revenue (FBR) to a meeting with the trade associations to talk about the indirect taxes that the merchants are paying.

Additionally, he claimed that FBR officers are charging the traders, the majority of whom are less educated, “monthly charges.”

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