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maithil

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ISLAMABAD: Pakistan and the IMF are inching towards formal revival of the stalled Fund programme, as the government has decided to hike power tariff by 25-30 percent and to abolish up to Rs200 billion corporate sector income tax exemptions.

The top political leadership has given go-ahead to the economic team to fulfill all the required prerequisites for revival of the stalled programme under $6 billion Extended Fund Facility (EFF).

The power tariff will be hiked in a gradual manner up to 25 to 30 percent in a bid to fulfill the IMF condition,” top official sources confided to this correspondent. The IMF program stalled in February 2020 after the COVID-19 outbreak. The second review is now under completion and it is yet to be seen whether the second and third reviews will complete simultaneously or these will be done separately. The IMF and FBR teams held a virtual crucial round of talks last Monday night and both sides explored the possibilities of abolishing the corporate sector income tax exemptions.

The FBR identified Rs150 billion worth of tax exemption of the corporate sector, which could be withdrawn either through a presidential ordinance or a mini-budget by moving a fresh finance bill in the second half (Jan-June) of the current fiscal year. A top FBR official said if these exemptions were withdrawn in the current fiscal, the results will appear in the next fiscal year. The FBR’s working showed that the corporate sector enjoyed up to Rs200 billion income tax exemptions and it is yet to be seen how much exemptions would be abolished in the next phase of legislation approval process.

When this correspondent contacted a top official of FBR, he said the IMF and FBR teams had held hectic rounds of parleys on Monday night and discussions were still underway. “There is agreement on a number of clauses, but there are significant areas of divergence as well. The next meeting is expected in January 2021 because currently there are Christmas and New Year holidays.

The IMF team inquired about the income tax exemptions granted to the Chinese companies under the CPEC arrangement. The Pakistani side told the IMF officials that these exemptions were meant for 25 to 30 years and could not be withdrawn.

The IPPs exemptions are going to end after expiry of 30 years probably next year and both sides have agreed that no further exemptions would be provided. “Now the ball is in the government's court, and when Islamabad moves towards fulfillment of pre-requisite conditions, the IMF will accomplish second review and its board will grant approval for release of a third tranche of $450m probably in February or March 2021,” said top official sources.

When this reporter contacted IMFs Resident Chief in Pakistan Teresa Daban Sanchez seeking her comments, she replied, “The Pak authorities and IMF team remain closely engaged. Discussions are going on and both teams are working very hard and non-stop to bring the programme review to a positive conclusion”.

On the possibility of withdrawal of income tax exemptions, the sources said Pakistan and the IMF had explored possibilities to abolish corporate sector income tax exemptions.

Important exemptions of corporate sector that can be considered to be abolished in next piece of legislation include tax credit for investment in balancing, modernization and replacement of plant & machinery (corporate manufacturing sector) Rs65.168 billion tax credit for enlistment in Stock Exchange (Companies opting for enlistment in a registered stock exchange) (Rs357 million), tax credit for newly established industrial undertakings, corporate industrial units (including corporate dairy farming) Rs5.573 billion, tax credit for industrial undertakings established before the first day of July, 2011 (Corporate industrial units including corporate dairy farming) Rs6.486 billion, income tax exemption on any income derived by Sukuk holder in relation to Sukuk issued by “The Second Pakistan International Sukuk Company Limited” and the Third Pakistan International Sukuk Company Limited, including any gain on disposal of such Sukuk, Sukuk holders (Rs2.771billion impact), profit on debt derived by Hub Power Company Limited on or after the first day of July1991 (Hub Power Company Limited), exemption impact of Rs1.66million, any income of an agency of a foreign government, a foreign national (company, firm or association of persons) or any other non-resident person approved by the Federal Government for the purposes of this clause, from profit on moneys borrowed under a loan agreement or in respect of foreign currency instrument approved by the Federal Government, Agencies of foreign Governments, foreign nationals or any other non-resident person approved by the Federal Government (Rs6.557 billion), Income tax exemption to the Collective Investment Schemes and others.

 

hussain0216

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More devaluation, more power price hikes, more inflation and more misery on the way. Welcome to naya Pakistan.
Welcome to what happens when you have years of absolute senseless policies and looting of the country

This is the correction happening now
Thank Allah SWT that we did it just in time before the costs to Pakistan were too much to bare

Pray that IK stays so we can stay the course and not be diverted


this is going to hurt but only because we deserve it

If you still want looters who put you in this position back then you deserve much much more
 

masterchief_mirza

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IMF are a bunch of crooks with their conditions! The west will always hold leverage over us and stifle any hopes of rapid development as long as this "international" monetary fund exists.
 

TNT

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Welcome to what happens when you have years of absolute senseless policies and looting of the country

This is the correction happening now
Thank Allah SWT that we did it just in time before the costs to Pakistan were too much to bare

Pray that IK stays so we can stay the course and not be diverted


this is going to hurt but only because we deserve it

If you still want looters who put you in this position back then you deserve much much more
I dont see any course correction, that is the problem. I only see continuation of same policies as those of past looters. Even the faces are the same, same hafiz sheikh running economy who ran economy in zardari time, same bureaucrats running things that ran things under nawaz and zardari. Same pattern of borrowing, same pattern of amnesties for the rich, same pattern of taxing the poor. Hardly any gain in tax collection, no improvements in exports, no improvements in manufacturing. No recovery of looted wealth, which acc to imran khan was in 100s of billion ddollars. I would be hopeful if things had actually chanhed but reality is that nothing is changed, same old crap with new face of IK. Even corruption is same as before. You guys will realize it soon but just in denial now.
 

TheSnakeEatingMarkhur

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More devaluation, more power price hikes, more inflation and more misery on the way. Welcome to naya Pakistan.
Wellcome to Naya Pakistan which is showing you what happens when you keep taking loans... keep import based economy with nearly no revenue... and give out subsidies and do blunders like keep dollar exchange rate artificially low...
ISLAMABAD: Pakistan and the IMF are inching towards formal revival of the stalled Fund programme, as the government has decided to hike power tariff by 25-30 percent and to abolish up to Rs200 billion corporate sector income tax exemptions.

The top political leadership has given go-ahead to the economic team to fulfill all the required prerequisites for revival of the stalled programme under $6 billion Extended Fund Facility (EFF).

The power tariff will be hiked in a gradual manner up to 25 to 30 percent in a bid to fulfill the IMF condition,” top official sources confided to this correspondent. The IMF program stalled in February 2020 after the COVID-19 outbreak. The second review is now under completion and it is yet to be seen whether the second and third reviews will complete simultaneously or these will be done separately. The IMF and FBR teams held a virtual crucial round of talks last Monday night and both sides explored the possibilities of abolishing the corporate sector income tax exemptions.

The FBR identified Rs150 billion worth of tax exemption of the corporate sector, which could be withdrawn either through a presidential ordinance or a mini-budget by moving a fresh finance bill in the second half (Jan-June) of the current fiscal year. A top FBR official said if these exemptions were withdrawn in the current fiscal, the results will appear in the next fiscal year. The FBR’s working showed that the corporate sector enjoyed up to Rs200 billion income tax exemptions and it is yet to be seen how much exemptions would be abolished in the next phase of legislation approval process.

When this correspondent contacted a top official of FBR, he said the IMF and FBR teams had held hectic rounds of parleys on Monday night and discussions were still underway. “There is agreement on a number of clauses, but there are significant areas of divergence as well. The next meeting is expected in January 2021 because currently there are Christmas and New Year holidays.

The IMF team inquired about the income tax exemptions granted to the Chinese companies under the CPEC arrangement. The Pakistani side told the IMF officials that these exemptions were meant for 25 to 30 years and could not be withdrawn.

The IPPs exemptions are going to end after expiry of 30 years probably next year and both sides have agreed that no further exemptions would be provided. “Now the ball is in the government's court, and when Islamabad moves towards fulfillment of pre-requisite conditions, the IMF will accomplish second review and its board will grant approval for release of a third tranche of $450m probably in February or March 2021,” said top official sources.

When this reporter contacted IMFs Resident Chief in Pakistan Teresa Daban Sanchez seeking her comments, she replied, “The Pak authorities and IMF team remain closely engaged. Discussions are going on and both teams are working very hard and non-stop to bring the programme review to a positive conclusion”.

On the possibility of withdrawal of income tax exemptions, the sources said Pakistan and the IMF had explored possibilities to abolish corporate sector income tax exemptions.

Important exemptions of corporate sector that can be considered to be abolished in next piece of legislation include tax credit for investment in balancing, modernization and replacement of plant & machinery (corporate manufacturing sector) Rs65.168 billion tax credit for enlistment in Stock Exchange (Companies opting for enlistment in a registered stock exchange) (Rs357 million), tax credit for newly established industrial undertakings, corporate industrial units (including corporate dairy farming) Rs5.573 billion, tax credit for industrial undertakings established before the first day of July, 2011 (Corporate industrial units including corporate dairy farming) Rs6.486 billion, income tax exemption on any income derived by Sukuk holder in relation to Sukuk issued by “The Second Pakistan International Sukuk Company Limited” and the Third Pakistan International Sukuk Company Limited, including any gain on disposal of such Sukuk, Sukuk holders (Rs2.771billion impact), profit on debt derived by Hub Power Company Limited on or after the first day of July1991 (Hub Power Company Limited), exemption impact of Rs1.66million, any income of an agency of a foreign government, a foreign national (company, firm or association of persons) or any other non-resident person approved by the Federal Government for the purposes of this clause, from profit on moneys borrowed under a loan agreement or in respect of foreign currency instrument approved by the Federal Government, Agencies of foreign Governments, foreign nationals or any other non-resident person approved by the Federal Government (Rs6.557 billion), Income tax exemption to the Collective Investment Schemes and others.

Youtubers and Freelancers are going to pay taxes ? Mtlb kuch to acha hoga
 

Norwegian

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More devaluation, more power price hikes, more inflation and more misery on the way. Welcome to naya Pakistan.
So you want old bankrupt Pakistan?
F8D4F3E7-CDCB-4738-B56E-0CB70B0C00C6.jpeg
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IMF are a bunch of crooks with their conditions! The west will always hold leverage over us and stifle any hopes of rapid development as long as this "international" monetary fund exists.
They are not crooks. Crooks are those corrupt politicians who destroyed Pakistani economy over and over again
65C4D699-9423-40A1-8250-112F445C5997.jpeg
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Norwegian

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ziaulislam

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More devaluation, more power price hikes, more inflation and more misery on the way. Welcome to naya Pakistan.
why would we devalue the CAD is in positive

yes IMF will ask to balance the power cost..as you simply cant create money out of thin air..

the electricity courtesy to 20 return rate offered by us in the past and no dams built by khadm-i ala and raeis -i-surray palace means the cost of electricity is 17rs

we are selling at 14rs..

the govt has two options
1. create money with wand
2. increase electricity cost

i believe you may be able to help the govt with number 1, you have the printing machine at home

long term of course govt will need to build hydro dams with cost less then 7 cents
real question, can we muscle IMF Into compromise like we did in 2016(with help of USA)

i think we shouldn't we should fix the power sector

  1. make power expensive for 500 & above users
  2. privatize all distribution companies
  3. quickly add solar to drop the average price
  4. add ~100-200b from subsidy to less then 100 units users from budget
  5. retire the 2300 circular debt why loans and money earned from privatizing the state run LNG plants/distribution companies
 

Waterboy

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I dont see any course correction, that is the problem. I only see continuation of same policies as those of past looters. Even the faces are the same, same hafiz sheikh running economy who ran economy in zardari time, same bureaucrats running things that ran things under nawaz and zardari. Same pattern of borrowing, same pattern of amnesties for the rich, same pattern of taxing the poor. Hardly any gain in tax collection, no improvements in exports, no improvements in manufacturing. No recovery of looted wealth, which acc to imran khan was in 100s of billion ddollars. I would be hopeful if things had actually chanhed but reality is that nothing is changed, same old crap with new face of IK. Even corruption is same as before. You guys will realize it soon but just in denial now.
Exactly. Blind *** lickers of PTI are in a reverie. Nothing has changed. CPEC is a fuckin debt trap that will explode sooner or later.
 

ziaulislam

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Exactly. Blind *** lickers of PTI are in a reverie. Nothing has changed. CPEC is a fuckin debt trap that will explode sooner or later.
correct, hence why rationalization and careful monitoring is needed
PTI has pretty much done that, they skipped the M6 and made it to BOT
they have downsized the ml1 to 6.8 b from 9.2 b
only Dams were kept the same that are high productivity projects with huge amount of saving in fuel imports


currently, CPEC is not debt with grantee, most of it is investment, but if this investment doesnt bring up productivity then the remittance of profit over 30 years will create a ton of potential issues

hence we need to focus on exports..

which we have remittances, exports are up and imports down
I dont see any course correction, that is the problem. I only see continuation of same policies as those of past looters. Even the faces are the same, same hafiz sheikh running economy who ran economy in zardari time, same bureaucrats running things that ran things under nawaz and zardari. Same pattern of borrowing, same pattern of amnesties for the rich, same pattern of taxing the poor. Hardly any gain in tax collection, no improvements in exports, no improvements in manufacturing. No recovery of looted wealth, which acc to imran khan was in 100s of billion ddollars. I would be hopeful if things had actually chanhed but reality is that nothing is changed, same old crap with new face of IK. Even corruption is same as before. You guys will realize it soon but just in denial now.
well check the CAD
hafeez sheikh is technocrat, he was brought in to fix things and then he resigned when note prinitng started in late 2011

we well may see that again, if the current govt ends up doing note priting/state bank lending
 

Norwegian

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why would we devalue the CAD is in positive

yes IMF will ask to balance the power cost..as you simply cant create money out of thin air..

the electricity courtesy to 20 return rate offered by us in the past and no dams built by khadm-i ala and raeis -i-surray palace means the cost of electricity is 17rs

we are selling at 14rs..

the govt has two options
1. create money with wand
2. increase electricity cost

i believe you may be able to help the govt with number 1, you have the printing machine at home

long term of course govt will need to build hydro dams with cost less then 7 cents
real question, can we muscle IMF Into compromise like we did in 2016(with help of USA)

i think we shouldn't we should fix the power sector

  1. make power expensive for 500 & above users
  2. privatize all distribution companies
  3. quickly add solar to drop the average price
  4. add ~100-200b from subsidy to less then 100 units users from budget
  5. retire the 2300 circular debt why loans and money earned from privatizing the state run LNG plants/distribution companies
You can't fix the power sector. It has to default and assets sold to private companies. Hydro power will take a decade to replace fossile based power stations
Exactly. Blind *** lickers of PTI are in a reverie. Nothing has changed. CPEC is a fuckin debt trap that will explode sooner or later.
Who put us in this debt trap, Patwari?
currently, CPEC is not debt with grantee, most of it is investment, but if this investment doesnt bring up productivity then the remittance of profit over 30 years will create a ton of potential issues
It could have been so simple. China should have payed for entire Cpec and Pakistan could have lend Gawadar port to China in return. But China opted for Sri Lanka like Pakistani default so they could get Gawadar port as extortion. I didn't expect that from our Chinese brothers
 

Last starfighter

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IMF are a bunch of crooks with their conditions! The west will always hold leverage over us and stifle any hopes of rapid development as long as this "international" monetary fund exists.
So why don't you fill the financial black hole in Pakistan. Then no need for IMF , WB , ADB , Money from Middle East or anyone else. All because you put your hand in you're pocket
 

Norwegian

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So why don't you fill the financial black hole in Pakistan. Then no need for IMF , WB , ADB , Money from Middle East or anyone else. All because you put your hand in you're pocket
Some Pakistanis are so arrogant. Pakistan has gone to IMF with a begging 22 times and yet these Pakistanis keep blaming IMF for their financial problems. It's like a beggar abusing people on the street who put money in his begging bowl.
 

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