Govt to impose 30% on IT Exports & Services

[SEOminati]

Thanks. Do you have latest budget tax sheet about freelancers?

 

[Patriot forever]

Everyone is incompetent in Pakistan. There are no exceptions. Capital/investments fly or dry out when a nation is on the brink of default which Pakistan is nowadays (hence, the slump in RDA). PTI was en route imposing hikes under the head of GST each month other than allowing adjustment of fuel prices per their commitment to IMF after the program was to get reactivated. It was only when the political climate heated up (and departure looked imminent at the back of establishment indifference to his pleas for assistance) that Khan g realized it was time to break the bank so as to leave any new incumbents with landmines. Those cost the country 125 billion PKR on a monthly basis. Obviously, you had to run a huge fiscal deficit (and then finance that deficit by debt accumulation, for existing debt servicing, etc.).

The "growth" came at the back of the 4.3 trillion PKR deficit budget. All this while lip service was paid to the sustainability of the growth. We are seeing how sustainable the bubble is now. What could one have hoped for considering the pathetic pace of developing and operationalizing SEZs throughout the PTI govt. The national productive capacity did not increase by a quantum where it could have substituted for imports in a meaningful manner and created exportable surpluses that were large enough to moderate the CAD that perpetually haunts any growth spurt in Pakistan (ultimately draining it and leaving behind a painful period of stagflation).

Sadly my friend you are just not connecting dots properly and making a picture that suits your political narrative. The numbers are flawed so is your logic.

1) PTI did not colled the required fuel taxes yet still managed to secure IMF programme, this is where competence comes into play. ( Last IMF tranche was in Feb)

2) Fuel subsidy was just 30b not 125b. In fact oil prices peaked in Feb.
The extra subsidy is due to rapid depreciation of rupee fueled by incompetence afterwards and uncertainty introduced by VONC.
(Dollar was I think in the 170s on March 7).
The prices would be 170-180 (at max without subsidies) if one incorporates the depreciation rate both supported by trajectory and financial institutions projections.

3) You talked about budget deficit, please elaborate what does the current policy rates as well as banks lending rates in the current regime holds for us?

4) The fisical deficit was I think is 2.5t in the first 9 months.
You said growth was on the back on government spending, a balant distortion if one studies the core composition of growth achieved, on top of it the primary balance ( actual government spending without interest payment) stands at just around 400b in the first 9 months.
The growth was organic not artificial.


5) Regarding SEZ we had this discussion before.

6) Our CAD figures for Feb ( March is also not bad but I refrained from including it since the political uncertainty already kicked in after 8th March not to mention PM powers along with the cabinet is curtailed once VONC is submitted) is very reflective of where pti left the economy.

Vaccines imports along with TERF rollout were the major factors that inflated CAD figures in the first half of this FY.
Furthermore a lot of fun was of ex-oil CAD as well completely ignoring its significance in decision making.

7) Regarding GST you are dead wrong, what you are confusing it with is the removal of GST exemptions from certain products ( which pti fulfilled to a great degree during Feb review of IMF programme)
PLMN on the other hand increased GST by a full % point during their last tenure to inflate revenue figures.

The main reasons why Pakistan got into this mess..

1) Might I remind you the reason why our BoP crisis extrapolated in the first place was because of literal stagnation of exports/ very little in rease in remittances in the 2013-2018 period on the other hand our imports grew. ( Wasted the most favourable 4 years in fact PPP did a much better job in much more unfavourable environment)
2) IPP contracts that have significantly impacted Pakistan industrial competitiveness for a long time.

Infact this is the first time in the last decade our export growth rate matched our regional piers Bangladesh and India during the last 2 years of pti government ( exceeded as regional peers figures incorporate the much lower base from covid period ).

You are a sharp person that is why I expect a more though out response from your end rather than assumptions ( like the one you made regarding remittances based on what you hear rather than data ).
Furthermore I remember an another point that you made regarding cash transfers to propel growth and I said otherwise ( Covid package). Listen to SBP Murtaza as he explained in simple terms just recently in his interview how well conceived and we'll though out it was.

Had IK wanted to trap plmn he would not have secured the IMF tranche in Feb just weeks before VONC.

 

[Pak Nationalist]

Sadly my friend you are just not connecting dots properly and making a picture that suits your political narrative. The numbers are flawed so is your logic.

1) PTI did not colled the required fuel taxes yet still managed to secure IMF programme, this is where competence comes into play. ( Last IMF tranche was in Feb)

2) Fuel subsidy was just 30b not 125b. In fact oil prices peaked in Feb.
The extra subsidy is due to rapid depreciation of rupee fueled by incompetence afterwards and uncertainty introduced by VONC.
(Dollar was I think in the 170s on March 7).
The prices would be 170-180 (at max without subsidies) if one incorporates the depreciation rate both supported by trajectory and financial institutions projections.

3) You talked about budget deficit, please elaborate what does the current policy rates as well as banks lending rates in the current regime holds for us?

4) The fisical deficit was I think is 2.5t in the first 9 months.
You said growth was on the back on government spending, a balant distortion if one studies the core composition of growth achieved, on top of it the primary balance ( actual government spending without interest payment) stands at just around 400b in the first 9 months.
The growth was organic not artificial.


5) Regarding SEZ we had this discussion before.

6) Our CAD figures for Feb ( March is also not bad but I refrained from including it since the political uncertainty already kicked in after 8th March not to mention PM powers along with the cabinet is curtailed once VONC is submitted) is very reflective of where pti left the economy.

Vaccines imports along with TERF rollout were the major factors that inflated CAD figures in the first half of this FY.
Furthermore a lot of fun was of ex-oil CAD as well completely ignoring its significance in decision making.

7) Regarding GST you are dead wrong, what you are confusing it with is the removal of GST exemptions from certain products ( which pti fulfilled to a great degree during Feb review of IMF programme)
PLMN on the other hand increased GST by a full % point during their last tenure to inflate revenue figures.

The main reasons why Pakistan got into this mess..

1) Might I remind you the reason why our BoP crisis extrapolated in the first place was because of literal stagnation of exports/ very little in rease in remittances in the 2013-2018 period on the other hand our imports grew. ( Wasted the most favourable 4 years in fact PPP did a much better job in much more unfavourable environment)
2) IPP contracts that have significantly impacted Pakistan industrial competitiveness for a long time.

Infact this is the first time in the last decade our export growth rate matched our regional piers Bangladesh and India during the last 2 years of pti government ( exceeded as regional peers figures incorporate the much lower base from covid period ).

You are a sharp person that is why I expect a more though out response from your end rather than assumptions ( like the one you made regarding remittances based on what you hear rather than data ).
Furthermore I remember an another point that you made regarding cash transfers to propel growth and I said otherwise ( Covid package). Listen to SBP Murtaza as he explained in simple terms just recently in his interview how well conceived and we'll though out it was.

Had IK wanted to trap plmn he would not have secured the IMF tranche in Feb just weeks before VONC.

It had committed it was going to do that (collect levies that it had abolished other than increasing the fuel prices). The change of tack came when Ik read the writing on the wall and went into what we shamefully call "election mode" (embarrassingly destroying national fiscal health is what politicians think wins elections) and gave mind-numbing subsidies on power/fuel. Depreciation of PKR was a given thing when our inflows were limited while the outflows were mounting due to high global food and energy import prices. The narrative of triumph that has been concocted by PTI spin doctors has been amply provided by the establishment now which has unwittingly made PTI a political martyr.

Budget deficit to touch record Rs4.3tr | The Express Tribune

Gap is widening despite reduction of Rs200b in federal development budget

tribune.com.pk

Financing expansion in manufacturing through the provision of cheap credit through SBP is what I referred to when I talked about inorganic growth. We all saw how car financing also blossomed unleashing a bonanza in the extractive auto sector that is primarily import-oriented. The same goes for the real estate development sector which relies on many imported inputs.

VONC could not affect CAD. How many USD worths of vaccines did Pakistan import? 2 billion USD maybe?

Will get back to the remaining later.

 

[Patriot forever]

It had committed it was going to do that (collect levies that it had abolished other than increasing the fuel prices). The change of tack came when Ik read the writing on the wall and went into what we shamefully call "election mode" (embarrassingly destroying national fiscal health is what politicians think wins elections) and gave mind-numbing subsidies on power/fuel. Depreciation of PKR was a given thing when our inflows were limited while the outflows were mounting due to high global food and energy import prices. The narrative of triumph that has been concocted by PTI spin doctors has been amply provided by the establishment now which has unwittingly made PTI a political martyr.

Budget deficit to touch record Rs4.3tr | The Express Tribune

Gap is widening despite reduction of Rs200b in federal development budget

tribune.com.pk

Financing expansion in manufacturing through the provision of cheap credit through SBP is what I referred to when I talked about inorganic growth. We all saw how car financing also blossomed unleashing a bonanza in the extractive auto sector that is primarily import-oriented. The same goes for the real estate development sector which relies on many imported inputs.

VONC could not affect CAD. How many USD worths of vaccines did Pakistan import? 2 billion USD maybe?

Will get back to the remaining later.

1) Need to understand how IMF negotiations work. The demand of the IMF is related to Rs 400 petroleum levy budgeted by Shaukat tareen. They than said atleast raise petroleum levy by Rs 4 every month ( raise 250b or 200b if not 400b) . The important point to note is these demands were before IMF tranche was being negotiated ( the one released in Feb). The reason IMF agreed to release the tranche was because of the strong revenue collection. In short yes we can achieve the revenue target without collecting Rs 400b. One needs to present a workable solution ( with actual achieved results not proposed or made up).
It's a give and take proposition but one needs to have something to give.

( Now instead of Rs400b, Miftah has budgeted Rs750b that comes to Rs50 per liter, what IMF will do is demand that in order to achieve 750b you need to do a staggered increase or a set amount from the first month, if short present a workable solution to balance off the deficit somewhere else).

The point to understand is, IMF is not primarily concerned about taxes in petrol rather it is concerned about is the overall revenue/ fisical aspect of the things.

This is how pti successfully negotiated IMF tranche that was released in Feb weeks before VONC.

IMF has to be satisfied that the numbers do add up, IMF does not believe in hearsay you have to show them numbers to prove your argument.

2) PKR depreciation yes its related to inflows and outflows primarily but the parameters determine that are much more complex.
How much was our CAD in Feb ( just $0.5b). Than what led to sudden rupee depreciation after VONC? Just compare the depreciation rate 3 months before 8th of March and the proceeding 3 months, will answer your question.

On 4th of March ( the weekly reporting prior to 8th of March VONC announcement) country's overall liquid reserves were 22.8b.

3) Expansion in manufacturing or other methods to promote productivity. Not only it leads to wealth generation but also much needed inflows. Countries promote/facilitate this type of investment financing. This is the opposite of growth through subsidised consumption. I am shocked at the argument you made.

4) Vaccines along with TERF rollout is significant. (My estimate 4-5b easy). TERF rollout has down the line multiplier effect, the dollars spent will yield significant gains.

There was nothing wrong with the direction. Now the economy is in a tailspin.

( The reason ex-oil CAD is important is in decision making to make sure one does not go overboard to mitigate an external non consistent shock and damage economy in the long run).

 

[AZ1]

It is now called tech destination.

Freelancer

Freelancer

app.techdestination.com

Have you received your status as registered yet? Mine is on pending from weeks.

 

[Imran Khan]

IT companies should leave pakistan for good

 

[SEOminati]

Have you received your status as registered yet? Mine is on pending from weeks.

It's the same for me .......

 

[AZ1]

It's the same for me .......

looks like they wouldnt give registered status now to have 1% from IT

Also when you fill the form, did you have options for CNIC photo upload, Bank certificate?


When I registered these upload options were not there, but now when I try to register from other email id and click on register form options are there.

May be we have to register again as new?

 

[SEOminati]

looks like they wouldnt give registered status now to have 1% from IT

Also when you fill the form, did you have options for CNIC photo upload, Bank certificate?


When I registered these upload options were not there, but now when I try to register from other email id and click on register form options are there.

May be we have to register again as new?

I think these will be available after initial verification. It had the options such as which platforms I earn from, since when etc.

I will try this tomorrow for sure. But first will have to delete the existing account.

 

[AZ1]

I think these will be available after initial verification. It had the options such as which platforms I earn from, since when etc.

I will try this tomorrow for sure. But first will have to delete the existing account.

I got the response today and they denied it saying I have already register my business as NTN so I have to apply for sole proprietorship company registration.

How much taxes are on IT firms if I register?

 

[Jango]

The point to understand is, IMF is not primarily concerned about taxes in petrol rather it is concerned about is the overall revenue/ fisical aspect of the things.

And no one wants to understand this simple point and get it into their head.

IMF asks you to raise XYZ taxes because that's the easiest way in their eyes to manage the fiscal deficit. If you can give them another way to bridge the deficit without raising XYZ tax, un ki bala say hai.