(MENAFN - Khaleej Times) Pakistan's Finance Minister, Asad Umar, on Wednesday unveiled details about Pakistan Tehreek-i-Insaf's (PTI) 'mini-budget', which is targeted towards encouraging investment in the country and is expected to invigorate the country's stock market, agriculture, and industrial sectors.
Speaking at the National Assembly session, Umar described his party's mini-budget as more of a corrective measure that will reduce the gap between Pakistan's rich and poor by addressing various needs across different sectors. In addition, Umar said that he hoped that the success of the amendments would mean that the country would not have to approach the International Monetary Fund (IMF) for any more future bailout packages.
According to IMF estimates, Pakistan's economic growth is expected to slow this year to four per cent, from the 5.8 per cent witnessed in 2018, and its fiscal deficit is set to hit 6.9 per cent of gross domestic product. This mini-budget constitutes the third finance bill for the 2018-2019 fiscal year. The cabinet approved the Finance Supplementary (Second Amendment) Bill, 2019 during the meeting. Earlier on September 18, the PTI government had presented its first mini-budget.
Umar explained that the features of the Finance Supplementary (Second Amendment) Bill of 2019 are designed to encourage small and medium-sized enterprises (SMEs) across the country, and make it easier for them to operate. Most notably, the 49 per cent tax on SMEs has been reduced to 20 per cent, making it easier to open and conduct business in the country. SMEs will also be exempt from filing withholding tax returns every month and will only need to submit them twice every year. A pilot scheme is also set to be introduced in Islamabad to facilitate traders in filing and paying taxes.
In addition, the amendment will also bring some much needed relief to Pakistan's farming community. Interest on agriculture loans has been reduced from 49 per cent to 29 per cent. Also, duty on diesel engines for agricultural procedures has been set at five per cent from its current 17 per cent. Gas Infrastructure Development Cess will also be removed from fertiliser production.
Allying several fears about rising taxes, Umar announced that the bill reduced the Rs20,000 fixed tax on marriage halls to Rs5,000. The one per cent per annum reduction in corporate income tax is also set to continue, and the super tax on non banking companies is to be abolished. The ban on the purchase of vehicles for non-filers will be lifted for cars up till 1300CC capacity, but higher taxes will apply. In addition, taxes on cars with an engine capacity of 1800CC and above is also set to be increased. Taxes on mobiles have also been amended, with taxes for the budget segments to be reduced, while high end luxury sets will become more expensive. Withholding tax on bank transactions will be waived off for tax filers.
Umar also noted that the bill was focused on promoting the use of sustainable energy in the country, and that investments in solar panels and wind turbines will be exempt from duties and taxation for up to five years. There is also set to be a reduction, and, in certain cases, a complete abolishment of duties on raw materials to support export industries. The duty on news print has also been abolished completely.
Rohma Sadaqat I am a reporter and sub-editor on the Business desk at Khaleej Times. I mainly cover and write articles on the UAE's retail, hospitality, travel, and tourism sectors.Originally from Lahore, I have been living in the UAE for more than 20 years. I graduated with a BA in Mass Communication, with a concentration in Journalism, and a double minor in History and International Studies from the American University of Sharjah.If you see me out and about on assignment in Dubai, feel free to stop me, say hello, and we can chat about the latest kitten videos on YouTube.