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Express Tribune
a day ago
- Business
- Express Tribune
Trade bodies advocate restoration of final tax regime
Trade bodies have expressed concern over the imposition of the normal tax regime under the Finance Act and proposed several measures to resolve their pressing problems. They have advocated that the final tax regime for the export sector should be reinstated and under this mechanism the tax rate can be increased gradually. They suggested tax rates of 1.5% for FY25, 1.75% for FY26 and 2% from FY27 onwards, adding that this approach would ensure the required increase in revenue without the need for complex tax filings or audits. A high-level delegation comprising representatives from the Sialkot Chamber of Commerce and Industry, Pakistan Readymade Garments Manufacturers and Exporters Association and Pakistan Hosiery Manufacturers Association met with Special Assistant to Prime Minister (SAPM) on Industries and Production Haroon Akhtar Khan on Monday. They discussed crucial matters including the final tax regime versus the normal tax regime, industrial policy and measures to improve the ease of doing business. A major worry was the emerging practice of tax officers, who were demanding an additional 0.5% advance tax from exporters to meet revenue targets. This raises the effective tax burden by 150%, a level that is utterly unsustainable for the value-added export sectors, especially those dominated by small and medium enterprises (SMEs), the representatives of trade bodies said. The final tax regime was introduced in fiscal year 1991-92 with a 0.5% fixed tax on exports. It was a remarkable success as tax collection rose from Rs343 million in 1990-91 (pre-final tax regime) to Rs855 million in 1991-92, reflecting a staggering 149% growth. They stressed that it not only boosted government revenue with minimal administrative cost but also paved the way for exponential growth in exports, particularly from regions like Sialkot, while significantly reducing corruption and discretionary interventions. Over the decades, the final tax regime provided exporters with a simple, transparent and harassment-free taxation model, but the imposition of the normal tax regime increased the burden, they said. The new policy allows a 2% deduction at source on export proceeds (a 100% increase), an unprecedented move that undermines export viability. They pointed out that there was 1% minimum tax and 1% advance tax (total 2%) at source, and 29% tax on companies and 45% on individuals/Association of Persons (AOPs) after assessment. The trade representatives also raised the issue of 10% surcharge on income exceeding Rs10 million for AOPs/individuals and super tax of 1-10% for income exceeding Rs150 million. They were of the view that the shift to the normal tax regime would have significant implications with the potential for unfair practices. The introduction of refunds and complex tax assessments may incentivise exporters to manipulate financial statements to maximise refunds. The normal tax regime could also reduce the inflow of export proceeds as businesses may seek to avoid higher tax burdens by resorting to under-invoicing. Exporters may deliberately declare lower values for goods or services to reduce the taxable income, leading to minimum tax liabilities and parking of funds abroad. Addressing the concerns, SAPM Haroon Akhtar assured the delegation that the government was fully aware of the challenges faced by the business community. "We are committed to taking all possible measures to resolve these issues," he stated. He revealed that a proposal would be drawn up to include a comprehensive and standardised definition of SMEs in the new industrial policy. "A stable and predictable policy framework is essential for attracting investment and ensuring sustainable industrial growth," the PM aide remarked.
Business Recorder
12-07-2025
- Business
- Business Recorder
1H: loss-making SOEs incur Rs343bn loss
ISLAMABAD: The loss-making state-owned enterprises (SOEs) incurred a combined loss of Rs343 billion during the first half of fiscal year 2025, bringing the total accumulated losses of these loss-making entities to Rs5.893 trillion—a stark indicator of deep-rooted financial inefficiencies and the urgent need for turnaround strategies. Finance Division released bi-annual report on SOEs fiscal year 2025 (July 2024 to December 2024), which noted that National Highways Authority (NHA) recorded the largest loss of Rs153.3 billion, pushing its accumulated losses to Rs1,953.4 billion—a reflection of the unsustainable toll revenue model against massive road infrastructure expansion. Quetta Electric Supply Company (Qesco) and Sukkur Electric Power Company (Sepco) followed with losses of Rs58.1 billion and Rs29.6 billion, respectively, with accumulated losses of Rs770.6 billion and Rs473.0 billion, underscoring chronic inefficiencies and poor recoveries in the distribution segment. State-Owned Enterprises: CCoSOEs concerned over staggering losses Other notable contributors to the fiscal drain included Pakistan Railways (Rs26.5 billion loss, accumulated losses Rs6.7 billion), Peshawar Electric Supply Company (Pesco) with Rs19.7 billion loss (Rs684.9 billion accumulated), and Pakistan Steel Mills (PSM) reporting Rs15.6 billion in losses, raising its accumulated shortfall to Rs255.8 billion. Additionally, Pakistan Telecommunication Company Limited (PTCL) posted Rs7.2 billion in losses (accumulated: Rs43.6 billion), Pakistan Post Rs6.3 billion (Rs93.1 billion accumulated), and Utility Stores Corporation (USC) Rs4.1 billion (Rs15.5 billion accumulated), revealing persistent operational and structural issues. Among power generation entities, the GENCOs (I-IV) together posted over Rs8.3 billion in combined losses: GENCO-II (Guddu) at Rs3.8 billion, GENCO-III (Muzaffargarh) at Rs3.1 billion, and GENCO-I (Jamshoro) at Rs1.3 billion. Neelum Jhelum Hydro Power Company posted Rs2.3 billion in losses (accumulated: PKR 58.2 billion). Collectively, 'All Other' loss-making SOEs added Rs2.7 billion to the burden, with their cumulative losses totaling Rs1,285.96 billion, bringing the total accumulated losses of these 15+ entities to Rs5,893.2 billion—a stark indicator of deep-rooted financial inefficiencies and the urgent need for turnaround strategies. The financial performance of Pakistan's power distribution companies (DISCOs) over the six-month period reveals a deeply concerning trend of escalating losses, significantly amplified once government subsidies are adjusted out of revenues. The total core operating actual loss for the period stands at Rs283.7 billion, with notable contributors including Qesco Limited (Rs92.65 billion loss), Pesco Limited (Rs53.68 billion), and Hyderabad Electric Supply Company (Hesco) Limited (Rs39.63 billion). Even DISCOs with positive EBIT before subsidy removal—such as Multan (EBIT Rs8.4 billion), Faisalabad (Rs52 billion), and Gujranwala (Rs20.9 billion)—turned loss-making after adjusting for subsidies, incurring actual losses of Rs35.17 billion, Rs13.12 billion, and Rs7.32 billion, respectively. Lahore, Islamabad, Sukkur, and Tribal DISCOs also showed EBIT gains or marginal losses but failed to stay profitable post-adjustments. Particularly, alarming is Quetta DISCO, with an EBIT loss of Rs60.36 billion and additional subsidies of Rs 32.30 billion still leaving a staggering net loss. Compounding these financial losses is the persistent 20 per cent technical and commercial loss of electricity units, pointing to deep-rooted inefficiencies in billing, recovery, and transmission infrastructure. These structural flaws push the 6-month average sectoral loss close to Rs300 billion, which extrapolates to Rs600 billion annually, underscoring an urgent imperative for transformational reforms. Without rapid overhaul—targeting governance, technology, privatization or concession models, and tariff realignment—the fiscal haemorrhaging will not only burden the national exchequer but also paralyze broader energy sector recovery and investment. Copyright Business Recorder, 2025
Time of India
02-05-2025
- Business
- Time of India
Growth of listed companies alone does not provide a comprehensive picture of consumption trends: Marico MD Saugata Gupta
Marico managing director Saugata Gupta said growth of listed companies alone does not provide a comprehensive picture of consumption trends, which largely remained stable during the quarter helped by improving rural demand. #Pahalgam Terrorist Attack Pakistan reopens Attari-Wagah border to allow stranded citizens in India to return Key Jammu & Kashmir reservoirs' flushing to begin soon Air India sees Pakistan airspace ban costing it $600 mn over 12 months "Commentary for unlisted players, including Indian subsidiaries of multinational corporations, D2C players and regional brands, indicates a slightly better performance, underscoring broader demand resilience. Data of some of the D2C and unlisted players does not get captured and the growth could be a tad higher," Gupta said during its earnings call. Over the past week, top executives of nearly a dozen consumer goods MNCs, including Unilever, Colgate Procter & Gamble, Reckitt, PepsiCo, and L'Oreal in their earnings calls cited India as a major growth driver, especially among emerging markets, in the past quarter. Some have flagged a softness in urban markets due to slow wage growth and inflation squeezing household budgets, but predicted a strong recovery to set in this fiscal year. Play Video Pause Skip Backward Skip Forward Unmute Current Time 0:00 / Duration 0:00 Loaded : 0% 0:00 Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 1x Playback Rate Chapters Chapters Descriptions descriptions off , selected Captions captions settings , opens captions settings dialog captions off , selected Audio Track default , selected Picture-in-Picture Fullscreen This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Opacity Opaque Semi-Transparent Text Background Color Black White Red Green Blue Yellow Magenta Cyan Opacity Opaque Semi-Transparent Transparent Caption Area Background Color Black White Red Green Blue Yellow Magenta Cyan Opacity Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Drop shadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. The company behind Parachute and Saffola posted a 20% increase in revenues during the quarter ended March to Rs2730 crore, with 7% volume growth in its India business. Net profit rose 8% to Rs343 crore. Gross margin contracted by 300 basis points, primarily impacted by the rise in copra and vegetable oil prices, which was partly offset by price hikes. In comparison, Hindustan Unilever , the country's largest fast-moving consumer goods company, whose performance is considered a proxy for broader consumer sentiment in India, posted a 2% growth in underlying volume during the March quarter, although on a much higher base. Marico said retail and food inflation are moderating and bodes well for overall consumption in FY26 while government schemes, rise in MSPs and healthy monsoon forecasts will aid rural demand. Its food business in FY25 at Rs1900 crore revenue mark was five times bigger than FY20 while the digital first portfolio clocked average recurring revenue of Rs750 crore. Live Events "Consumer sentiment remains largely stable, supported by improving rural demand. Margins for most players are under pressure due to input cost pressure," said Gupta added that it expects gradually improving growth trends in the core categories of the Indla business on the back of moderating trends in retail and food inflation as well as the promise of a healthy monsoon season. "This will be further aided by our ongoing initiatives to support select general trade (GT) channel partners and transformative expansion in our direct reach footprint under Project Setu.
