Business

Centre, provinces reach consensus to harmonise GST on goods, services

Published

2 years ago

Farwa

Consensus pave way for $450 to $500mn loan from World Bank.
Decision will allow businesses to file one return of GST every month.
NTC appreciates stakeholders for building consensus.

ISLAMABAD: The federal government and the four provinces reached a consensus on the harmonisation of the general sales tax (GST) on goods and services, paving a way for the approval of a $450 to $500 million loan from the World Bank, The News reported Tuesday.

Finance Minister Ishaq Dar on Monday chaired the meeting of the National Tax Council (NTC) which showed appreciation towards the stakeholders for building a consensus and settlement of the decision on the harmonisation of GST for ease of doing business.

This decision will allow businesses to file one return of GST every month instead of filing five returns as one portal for filing GST returns would be placed.

According to the official announcement, the Federal Board of Revenue (FBR) chairman and provincial stakeholders evolved a consensus to proceed ahead in the spirit of greater national interest for harmonisation of GST under the umbrella of the NTC.

In the past, a consensus was agreed but no change in subsequent laws was made; that’s why it resurfaced again. However, official quarters argued that there was a major difference this time as Sindh and all other provinces agreed in the noted official minutes of the NTC meeting that everyone agreed on the consensus of harmonisation of GST on goods and services.

“If there is a requirement, then the subsequent laws will also be changed,” said a top close aide to the minister for finance, adding that the Centre and provinces had struck a consensus with the strategy of “give and take” for achieving a compromised agreement on a definition of goods and services in order to differentiate between the jurisdiction of federal and provincial governments.

Under the 1973 Constitutional arrangement, goods are the jurisdiction of the federal government and services fall under the domain of the provinces. The centre and provinces struck an agreement to resolve lingering disputes on the jurisdiction of taxation on toll manufacturing which was with the federal government, the right to collect GST on transportation rests with provinces, and taxation on construction will be shared by the centre and provinces as per constitutional arrangements and the right of GST collection on restaurants would be the domain of the provinces.

On the right to GST collection from restaurants, a heated debate occurred among the FBR and provincial authorities and finally, NTC decided to accept the right of provinces to continue the collection of GST as the right of the provinces.

A close aide to Dar said that he had convinced both sides to a consensus that the right of collection should be accepted in favour of those who could collect effectively and efficiently because ultimately it was aimed at enhancing the size of the pie.

He also reminded the provinces that around 60% collection of the FBR was returned to the provinces through a share of the NFC Award so the spirit of distribution of jurisdiction should be aimed at ensuring increased revenue collection. When asked about the proposal for handing over the right of collection of Agriculture Income Tax (AIT) to the FBR, he said that the FBR footprint was quite limited and its officers could not go into far-flung villages so he had asked the provinces to bring the rate of AIT in line with the FBR’s rate of tax on taxable income brackets. “Instead of taking big steps, we can move forward by making small moves,” he added.

The official statement stated that Punjab Finance Minister Mohsin Leghari, State Minister for Finance and Revenue Dr Aisha Ghous Pasha, Special Assistant to Prime Minister on Finance Tariq Bajwa, SAPM on Revenue Tariq Mehmood Pasha, secretary of finance, chairman FBR, provincial finance secretaries and other senior officers of Finance Division attended the meeting.

The meeting reviewed the progress on the decisions of the last meetings of the NTC on the harmonisation of GST across the country. The finance minister said that in order to have ease of doing business, harmonisation of GST was important. Further, GST harmonisation will be a major step towards the completion of policy actions under the World Bank’s RISE programme.

The participants shared their opinions on the harmonisation of GST. Pakistan is eyeing to secure World Bank’s program loan titled Resilient Institutions for Sustainable Economy (RISE)-II to strengthen the fiscal framework, and promote growth and transparency.

The proposed operation for a loan of $450 to $500 million focuses on improving fiscal management and fostering growth and competitiveness.

Business

The amount of trade between Saudi Arabia and Pakistan hits $700 million.

Published

4 hours ago

Farwa

Through the Special Investment Facilitation Council (SIFC), Pakistan’s trade connections with Saudi Arabia have grown significantly, with bilateral trade volume rising from $546 million to $700 million and exports to the Kingdom growing by 22%.

As bilateral economic cooperation continues to grow, Saudi investors have shown a strong interest in Pakistan’s construction, energy, agricultural, and information technology sectors. The objective for exporting IT services between the two countries has been raised from $50 million to $100 million.

Saudi Arabia has set up a help desk dedicated to making it easier for Pakistani IT companies to register in the Kingdom in order to expedite commercial procedures. The goal of this program is to speed up economic collaborations between the two countries and lower administrative barriers.

The well-known Saudi restaurant chain AlBaik has revealed plans to open locations in Pakistan, which is a big step for the food service industry and should lead to the creation of new job possibilities in the area.

Officials have noted that stronger business links between the two countries lead to greater economic stability, and the SIFC has played a crucial role in promoting these trade advancements. For bilateral trade and investment projects, the Council remains a crucial facilitator.

According to a trade official with knowledge of the developments, “the establishment of dedicated support mechanisms, such as the help desk for IT companies, demonstrates a commitment to long-term economic partnership,” The goal of these programs is to improve the conditions for commercial collaboration between the two nations.

The increasing amount of trade and the diversity of investment sectors show that Saudi Arabia and Pakistan’s economic ties are changing as both countries seek to deepen their business alliances in a number of industries.

Business

After more than 50 years, Bangladesh and Pakistan resume direct trade.

Published

4 hours ago

Farwa

After more than 50 years, the two governments will resume direct bilateral trade, with Bangladesh’s food ministry announcing Sunday that it will receive a supply of 25,000 tonnes of rice from Pakistan next month.

After former Prime Minister Sheikh Hasina was overthrown last August, relations between Bangladesh and Pakistan have begun to improve after decades of tense relations.

Since then, there have been increased bilateral interactions between Bangladesh and Pakistan. Nobel laureate Muhammad Yunus, the interim government’s senior adviser, has met twice with Pakistani Prime Minister Shehbaz Sharif.

According to the food ministry, Dhaka completed an agreement earlier this month to import grains from Pakistan.

“On March 3, the first shipment of 25,000 tonnes will reach Bangladesh,” Zia Uddin Ahmed, a ministry assistant secretary, told Arab News.

“This is the first time that Bangladesh has started importing rice from Pakistan at the government-to-government level since 1971.”

Following direct maritime contact between the two South Asian countries in November—a Pakistani cargo ship stopped in Bangladesh for the first time since 1971 with imports and exports arranged by private companies—their trade relations grew.

Resuming trade with Pakistan is a significant step for Bangladesh, according to Amena Mohsin, a lecturer at North South University and a specialist in international relations.

“We want to see progress in our bilateral relationship with Pakistan. Most significantly, we are currently going through a low point dispute with India, even though we constantly diversify our partnerships.

This most recent move to purchase rice from Pakistan is really significant in this context,” she told Arab News.

Business

The total amount of Pakistan’s liquid foreign reserves is $15.95 billion.

Published

3 days ago

Farwa

As of February 14, Pakistan’s total liquid foreign reserves were $15,947.9 million, with the State Bank of Pakistan’s (SBP) holdings being $11,201.5 million.

Official figures for the week ending February 14, 2025, show that the central bank’s liquid foreign exchange reserves rose by $35 million to $11,201.5 million.

Commercial banks maintained net foreign reserves of $4,746.4 million during the period under review, according to the breakdown of foreign reserves.

The nation’s total liquid foreign reserves as of the week ending February 07, 2025, were $15,862.6 million.

Of these, the central bank held $11,166.6 million in foreign reserves, while commercial banks kept $4,696 million in net reserves.