1. Subsidisation of CWSP imports: US initiates anti-dumping duty probe
April 21,
2016
The country''s already depleting
exports are set to receive a serious blow as the United States has imposed a 65
percent countervailing duty (CVD) on the imports of circular welded steel pipes
(CWSP) from Pakistan, according to American authorities in Islamabad. The US
Department of Commerce (DoC) also has initiated Antidumping Duty (AD) probe
into the import of circular welded pipes (CWP) from Pakistan, Oman, Philippines
and United Arab Emirates. "On April 4, 2016, the Department of Commerce...
announced its affirmative preliminary determination in the countervailing duty
(CVD) investigation," reads a fact sheet of DoC a spokesman of US Consulate
Karachi, Brian Asmus, made available to Business Recorder.
The America''s protectionist move
is going to make a multimillion dollar cut in the exports of Pakistan. With
Ministry of Commerce having set, in the delayed Trade Policy in March, a $35
billion export target by 2018, the first nine months of current fiscal year,
July-MarchFY16, saw the country''s exports shrinking 13 percent to $15.6
billion compared to $17.9 billion of FY15''s corresponding period.
US being the largest trade
partner of Pakistan, the dollar-hungry Islamabad sold out 56,700 metric tons
($50.62mn) of the now-banned carbon-quality steel pipes to America during a
three-year period: $23.79 million in 2012, $9.78 million in 2013 and $17.04
million in 2014. =
The probe came as a result of a
petition filed on October 28 last year by Bull Moose Tube Company (MO), EXLTUBE
(MO), Wheatland Tube (IL) and Western Tube & Conduit (CA) which accused the
Government of Pakistan of having assigned a preliminary subsidy rate of 64.81
percent for the exporters and producers of CWP. \
In the petition, the filers have
made Pakistan''s International Industries Limited (IIL) as a "mandatory
respondent". "The preliminary subsidy rate is based on facts
available and adverse inferences following Commerce''s preliminary
determination that the mandatory respondent and the Government of Pakistan had
not fully co-operated in the investigation," the DoC claimed. "All
other exporters/producers in Pakistan have also been assigned a preliminary
subsidy rate of 64.81 percent," it said.
Its positive preliminary findings
would lead to DoC instruct the US Customs and Border Protection to
"require cash deposits based on these preliminary rates" of 64.81
percent. The Pakistani products subject to this investigation are currently
classifiable in Harmonised Tariff Schedule of the United States (HTSUS). In
Pakistan, while the exporters use words like "allegedly" for DoC
claiming Islamabad was subsidising the export of CWSP, officials related to the
country''s trade appear less worried about the negative. Commerce Minister
Khurram Dastgir Khan whereas was not available for comments, CEO Trade
Development Authority of Pakistan (TDAP) S M Muneer appeared totally unaware of
any such development. When apprised, he said "such probes are very common
in the comity of world."
"They have all the right to
protect their (steel) industry," TDAP chief told Business Recorder.
In a stock filing on April 7, IIL informed its shareholders at Pakistan Stock
Exchange about the US DoC having started AD and CVD investigations on the imports
of CWSP from Pakistan.
"DoC... in order to protect
its local industry imposed a CVD of 64.81 percent until the final
determination," said Yasir Ali Quraishi, IIL''s company secretary.
"Our future sales to the US market have stopped owing to such preliminary
determination," he added. Assisted by the Government of Pakistan, his
company, Yasir said, intended to continue contesting the preliminary
determination and was hopeful, based on the merits of the case, that the said
punitive measure would be overturned at the stage of final determination.
The US International Trade
Commission (ITC) and DoC are due to make the final determination in the matter
on August 16. "(Department of) Commerce is scheduled to announce its final
determination in this investigation on August 16, 2016, unless the statutory
deadline is extended," says the fact sheet.
It said if the DoC and ITC made
an affirmative final determination that the imports of CWSP from Pakistan
"materially injure, or threaten material injury to, the domestic industry,
Commerce will issue a CVD order." "If either Commerce''s or the
ITC''s final determination is negative, no CVD order will be issued," it
said adding "The ITC is scheduled to make its final injury determination
approximately 45 days after Commerce issues its final determination, if
affirmative."
2. ST, duty on all defence imports may be waived: Senate informed
April 21,
2016
The Senate was informed on
Wednesday that sales tax and custom duty may be waived off on all defence
imports, besides IBC for defence budget 2016-17 may be revised from Rs 860
billion to Rs 920 billion. A report of Senate Standing Committee on Defence
that was presented in the house by its chairman Senator Mushahid Hussain Sayed
said that a pay and pension commission should be constituted besides adopting
one rank one pension formula for defence services.
It also recommended that power to
waive off austerity measures of defence organisations may be delegated to
secretary defence, adding 40 percent deduction from coalition support fund
reimbursement by government may be discontinued. It also said that out of total
$13 billion received through CSF from US since 9/11, 40% has gone to the
civilian government. The current year being the last year in respect of CSF, it
added, a balance amount of $200 million remains to be cleared by the US
government.
The report also recommended to
enhance the budgetary allocation to three armed forces according to threat
perception, adding the budget allocation to all three armed forces should be
related to threat perception which is markedly enhanced due to the current
geo-political situation and Pakistan's strategic location in the area.
Referring to a recent meeting of
"Pak-US Strategic Dialogue", it added, a proposal of establishing a
border management fund to the tune of $100 million was discussed.
The defence ministry has put
forward a proposal for the development of Federally Administrative Tribal Areas
(FATA) to the tune of $8 billion spread over 5 to 8 years, it said, adding US
government has agreed that a robust border management is essential for
maintenance of peace on Pak-Afghan border and further negotiations on the
matter will continue.
3. Biggest-ever tax evasion case of builder unearthed
April 21,
2016
Directorate General of
Intelligence and Investigation Inland Revenue (IR) has unearthed the biggest
tax evasion case of a builder/developer in the history of Pakistan involving
approximately tax liability of Rs 58.8 billion calculated on total tax
concealment of Rs 117.6 billion. Sources told Business Recorder here on
Wednesday that the Karachi based builder/developer, one of the biggest and
powerful developers in the real estate sector, is allegedly involved in massive
concealment of income.
The analysis of 4 banks' data,
inspection of records and detailed scrutiny of data exposed concealment to the
tune of Rs 117.6 billion. This is the biggest tax concealment case in the
history of FBR within the real estate sector and recovery of the evaded amount
may result in contribution of approximately Rs 58.8 billion in the national
kitty. The directorate has detected total concealment of Rs 117.6 billion, tax
Rs 29.4 billion @ 25 percent average. Penalty 100 percent of tax comes to Rs
29.4 billion. Total tax liability comes to approximately Rs 58.8 billion. The
quantum of tax evasion is so high that only one mega case could result in
sudden increase in revenue collection of the FBR.
FBR officials said that the
credit definitely goes to Khawaja Tanveer Ahmad, a top officer of Inland
Revenue Service, who is also Director General of Intelligence and Investigation
Inland Revenue, who supervised/monitored and pleaded case despite immense
pressure from powerful groups and lobbies. However, Karachi based courageous
officials of the agency completed the investigation against this biggest
builder/developer of Karachi.
Directorate General of I&I IR
has taken a historic initiative to unearth massive concealment of income by an
influential real estate developer of Karachi. Through analysis and
investigation of records, preliminary data exposed concealment to the tune of
billions by the said real estate developer. Such actions against big sectors
have pointed towards the seriousness of the agency to assist the FBR in
achievement of the assigned revenue collection targets for 2015-16.
Keeping in view sensitively of
some big cases, the agency has completed the legal formalities of taking prior
permission of high-ups and availability of irrefutable evidence for taking
action against the units. For the first time in the history of FBR, the
Directorate General of Intelligence and Investigation Inland Revenue has
continued its investigations in real estate sector to ensure recovery of
concealments involving billions of rupees. As a result of these actions, the
Directorate General of Intelligence and Investigation IR has emerged as top
investigative agency in detection of tax frauds in the country, sources
maintained.
Details of the case revealed that
the credible information was received by the Directorate of I&I-IR,
Karachi, from field visit that the business activities of a proprietor of
builders and developers of Karachi are not commensurable with his declared
versions. Reportedly, the proprietor of builders and developers was executing
more than one dozen construction projects under various titles. Each project
was being executed under the umbrella of a separate AOP, with different
partners and terms of conditions, to hide income and evade due taxes. In
addition a significant number of investors have made investments in these
projects and retrieval of such information would be useful in Broadening of Tax
Base (BTB) activities.
Accordingly, action under section
175 of the Income Tax Ordinance, 2001 was carried out on the principal business
place of the taxpayer located in Karachi, and the team resumed relevant record
for further scrutiny, On the basis of information, relating to bank accounts,
letters were written to the Mangers of relevant Bank / Branches for provision
of bank information in respect of various bank accounts associated with
taxpayer. Perusal of bank statements has endorsed the contention of the
Directorate.
Realising the establishment of
concealment, in his case, the taxpayer approached the High Court of Sindh,
Karachi, and filed civil suit against the action taken by the department. The
court has passed restraining order in the case on April 11, 2016 and directed
that no further proceedings can be carried out in the case. The directorate
will represent the case before the High Court of Sindh, sources added.
4. LHC issues notice to President for setting aside FTO's order
April 21,
2016
Lahore High Court (LHC) has
issued a notice to the President of Pakistan, who has set aside an order of the
Federal Tax Ombudsman (FTO), which has directed the Federal Board of Revenue
(FBR) to vacate order under Section 122 of the Income Tax Ordinance, 2001 and
warned the assessing officer for levelling allegations without referring to any
supporting evidence.
Sources told Business Recorder
that LHC has admitted a constitutional petition against the President on
the issue of acceptance of representation filed by the Federal Board of Revenue
(FBR) under Section 32 of the Federal Tax Ombudsman Ordinance, 2000 against an
order passed by the FTO.
It is learnt that petition was
moved by a Gujranwala based taxpayer through Waheed Shahzad Butt, Advocate,
challenging the acceptance of representation by the President of Pakistan
against the order passed by FTO Chaudhry Abdur Rauf, stating that act of office
of President is patently illegal. The order passed by office of President is
un-constitutional and without lawful authority, hence, the same is liable to be
declared unlawful and quashed.
Earlier, the FTO issued order to
the FBR to direct the concerned Commissioner-IR to invoke revisionary
jurisdiction under Section 122A of the Ordinance to vacate order passed under
Section 124/122(1) of the Ordinance and dispose of the rectification
application pending before the ACIR, the CIR concerned to warn the assessing
officer for levelling allegation of deliberate fabrication of accounts by the
chartered accountant/auditor in connivance with taxpayer without referring to
any supporting evidence and all field formations to exercise regular
supervisory oversight of work done by the assessing officers and ensure that
prompt cognisance is taken of all whimsical and arbitrary actions.
Petitioner claimed that "It
is the duty of office of President to dispense justice and functionaries representing
office of President are supposed to uphold the dignity of law and respect
command and orders of the Courts. On the other hand due to illegal acceptance
of representation under section 32 of the FTO Ordinance, 2000, the process of
law is being abused badly by the office of President, petition claimed.
The petitioner claimed that it
appears some officials working in the Presidency are involved in unduly
favouring revenue division employees, by admitting the illegal void
representations, filed against the orders passed by the FTO. The act of
officials representing of the Presidency is prima facie without lawful
jurisdiction, President is requested to take action against those responsible
for such illegal act, under his mandate and his commitment for Zero tolerance
for corruption and unfair practices because it is the duty of state
functionaries to dispense justice, the lawyer pleaded.
Petitioner further claimed that
the office of President is involved in violation of provisions of Federal Tax
Ombudsman Ordinance, 2000, Income Tax Ordinance, 2001 and Constitution of
Islamic Republic of Pakistan, 1973, which is itself equivalent to
maladministration and denial of justice. It seems that there is an intentional
attempt to dump the office of the FTO who is providing real redressal of
grievance to the aggrieved taxpayers of Pakistan against the patently illegal
intervention by the Revenue Division employees, petitioner added.
5. Export sectors: government urged to fulfil promise of zero rating
April 21, 2016
The government has gone back on
its promise of zero rating for five export sectors, which will indeed prove
most disastrous for the country's exports and economy, said Muhammad Jawed
Bilwani, Chairman, Pakistan Apparel Forum on Wednesday.
He strongly articulated that it
was very serious that the exports have declined further by 12.92% to $15.606
billion in the first nine months of the current fiscal year (July-March
2015-16) from $17.921 billion during the same period last year While the
exports of our regional competitors have increased. Isn't it a great irony and
dilemma that exports have decreased by Rs 239 billion which clearly proves the
amount of foreign exchange earnings lost by our nation. Further Rs 239 would
have been in circulation and would have resulted in earnings in tax revenue.
The export target is $35 billion for the current fiscal year and with negative
growth in exports, we are still 26% behind the target.
The decision not to grant zero
rating to the five export sectors would be tantamount to crippling and ruining
our exports and would indeed be suicidal because it has taken a lot of pains
and troubles for the five zero rated export sectors to struggle to export
against tough competition from regional competing countries with heavy odds
against them such as huge amount of their piled up liquidity outstanding with
the government in Sales Tax Refund Claims, Customs Rebate Claims and DLTL
Claims and to crown this all, rising cost of inputs.
Bilwani stressed that it is
imperative that the government of Mian Muhammad Nawaz Sharif - a business
friendly government - keeps the promise and commitment made by none other than
the Prime Minister of Pakistan, Mian Muhammad Nawaz Sharif himself to grant the
most practical zero rating facility in Sales Tax to the five vital export
sectors only because Zero Rating Facility extended in 2005 greatly helped in
boosting exports.
Bilwani was dismayed by the fact
that despite tall claims of release of held up Sales Tax Refund Claims of
exporters only some payments of claims below Rs 5 million against those RPOs
issued till August, 2015 were paid and that too, payments were made to a
favoured few. For exporters with claims over Rs 5 million, initially they were
promised payments in the form bonds and later payments in cheque but it is
surprising, he said, that as yet no payments have been made to them despite the
fact that RPOs against the same have been issued for 19 months.
He most earnestly appealed to the
Prime Minister of Pakistan that the zero rating - "No Payment No
Refund" system for exports should be implemented forthwith as per his
commitment made with the exporters because collecting Sales Tax and then
refunding is not only an exercise in futility but involves precious time of FBR
Staff and also burdens the foreign exchange earning exporters in unnecessary
hurdles and indefinite blockade of their sorely needed liquidity causing
extreme heartburn to them who have been instrumental in not only earning the
largest amount of sorely needed foreign exchange for the country but also
generating largest employment.
Bilwani rued the fact that
despite several Expo Exhibitions being encouraged by the Government of Pakistan
and tall claims of visits by large number of foreign buyers, unfortunately no
increase in exports is witnessed. He appealed to the Business Friendly
Government of Mian Muhammad Nawaz Sharif to be really pragmatic and seriously
review such futile exercises of the Government aimed to boost exports and
ensure result oriented measures such as providing forthwith zero rating
facility to the five export sectors; immediate and speedy release of held up
funds of the exporters with the Government; reduce of cost of inputs - gas,
electricity, water tariff etc and bring at par with our regional competitors,
all of which are most essential requirements of the exporters.-PR
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