Economic stance is better under advance reform agenda

Economic stance is better under advance reform agenda

Interview with Mr Ashfaq Yousuf Tola – President, Tola Associates

Profile:

Professional Accomplishments

Memberships:

Fellow Member of Institute of Chartered Accountants of Pakistan
Fellow Member of the Institute of Cost & Management Accountants of Pakistan
Life Member of Karachi Press Club
Life Member of SAARC Chamber of Commerce and Industry
Member of Karachi Tax Bar Association.

Key Achievements:

Presentation to IMF on Single Stage Sales Tax in December 2015
Visited Turkey as an official of Government of Pakistan to study Turkish Tax System and authored a report on Turkish Taxation System
Knowledge of more than 40 Jurisdictions around the Globe and co-authored report with Dr. Hafeez Pasha on Sindh Provincial Taxation System
International Speaker on Pakistan Economy and Non-Resident Taxation in 2018 and 2019 at Dubai, Abu Dhabi and Jeddah
Distinction of passing CA Examinations – Intermediate & Final (both groups together in 1st attempt) as trainee of PWC A. F. Ferguson & Co., Chartered Accountants

Areas of Expertise:

Tax Planning and Advisory
Business Advisory Services
International Mergers and Acquisitions
Corporate Finance and Investment Advisory
Due diligence and Forensic audits
Financial Product Designing and Launching
Public Listings and Corporate Affairs

Key Positions:

Member Board – Privatization Commission, Government of Pakistan (present)
Chairman – Sub-Committee on Taxation for promotion of Islamic Banking Ministry of Finance (2017)

Federal Board of Revenue, Government of Pakistan:

Chairman Anomaly Committee (2019)
Member Tax Reforms Implementation Commission (2016 to date)
Member Tax Reforms Commission (2015)
Member Tax Advisory Council (2014-15)
Member Taxation Reforms Co-ordination Group (2011-13)
Member Revenue Advisory Council (2011)

Institute of Chartered Accountants of Pakistan:

Vice President (present)
Member Council (present)
Chairman Fiscal Laws Committee (Taxation) (present)
Chairman Anti Money Laundering Committee (present)
Chairman CA Joint Committee (present)
Member Investigation Committee (present)
Member Examination Committee (present)
Member Public Sector Committee (present)
Member Overseas Coordination Committee (2018)
Member Regional Committee – (Southern Region) (1993-1996)
Secretary of Regional Committee (Southern Region) (1996)
Member Education and Training Committee (1994-95 95-96 96-97)
Member Technical Services Committee (1992-93 93-94)
Chairman Chartered Accountant Students’ Association (1993)

South Asian Federation of Accountants:

Member Fiscal Law Committee (present)
Member Tariff Committee (present)

Federal Tax Ombudsman:

Member Advisory Committee (South) (present)

Pakistan Institute of Corporate Governance:

Member Board of Directors (present)
Member Audit Committee (present)

Pakistan Institute of Public Finance Accountant:

Member Board of Governors (present)
Chairman CPD Committee (present)

Institute of Cost & Management Accountants of Pakistan:

Secretary of Karachi Branch Council (KBC) (1995 and 1996)
Elected Member KBC and Convener Seminar and Publication Committees (1992-96)
Member Technical Committee
Member Research Committee

Karachi Club:

President (2012 and 2013; and 2016 and 2017)
Honorary Secretary (2008)
Member Managing Committee (2003, 2004)

Professional Experience:

President Tola Associates (April 2017 to date)
Senior Partner Naveed Zafar Ashfaq Jaffery & Co, Chartered Accountants, a member firm of Prime Global International (2012 to present)
Partner Nasir Javaid Maqsood Imran Ashfaq, Chartered Accountants (2011 to March 2012)
Principal Strategic Officer in Stallion Textiles (Private) Limited (2008 to 2010)
Chief Executive Officer in Fincon (2000 to 2007)

PAKISTAN & GULF ECONOMIST had an exclusive conversation with Mr Ashfaq Yousuf Tola regarding The Multilateral Instrument (MLI), Tax Revenue Collection, Foreign Direct Investment, Balance of Payment and the outlook of the economy of Pakistan. Excerpts of the conversation are as follows:

The Multilateral Instrument:

The Multilateral Instrument (MLI) is one of the OECDs’ Base Erosion and Profit Shifting (BEPS) Project that was announced in 2012. The main purpose of the BEPS Project was to reduce BEPS, which OECD defines as “tax avoidance strategies that exploit gaps and mismatches in tax rules to artificially shift profits to low or no-tax locations”. The BEPS Project seeks to identify and eliminate the areas and instances of what is often referred to as “double non-taxation” circumstances in which income is connected with two or potentially more, jurisdictions, neither of which imposes a tax on it.

The Federal Government issued SRO 405(I)/2021 dated 01 April 2021 whereby it was informed that Pakistan had signed the Multilateral Convention to Implement Tax Treaty Related Measures to prevent base erosion and profit sharing (the MLI) on 7th June 2017, and had subsequently submitted a list of reservations and notifications and ratified the MLI by depositing an instrument of ratification on 18th December 2020. Now the above Convention is in force on 1st April 2021 and shall have effect in each of the contracting jurisdictions with respect to Covered Tax Agreements.

Tax Revenue Collection:

FBR collected tax revenue of Rs. 3,394 billion in July-March 2020-21 grew by 10% or Rs.318 billion when compared to Rs. 3,076 billion last year. FBR needs to collect Rs. 1,569 billion to achieve actual tax revenue collection target of Rs. 4,963 billion for Tax Year 2020-21.

Foreign Direct Investment:

During July-March 2020-21, Pakistan’s net FDI declined by 54.6% or $755 million to $1.39 billion as compared to $2.15 billion last year. During March 2021, Pakistan’s FDI stood at $167.6 million against $278.7 million last year. According to SBP, total Foreign Investment of Pakistan has dropped by 52.6% to $1.12 billion during July-March2020-21 in comparison with $2.37 billion last year.

Balance of Payment:

Pakistan’s Current Account deficit has declined by 51.6% from $31 million in February 2021 to $47 million in March 2021. On a cumulative basis, it remains in surplus of around $1 billion during July-March FY2020-21 against a deficit of $4.1 billion during July-March FY2019-20.

Outlook:

According to IMF, “the Pakistani authorities have continued to make satisfactory progress under the Fund-supported program, which has been an important policy anchor during an unprecedented period. While the Covid-19 pandemic continues to pose challenges, the authorities’ policies have been critical in supporting the economy and saving lives and livelihoods. The authorities have also continued to advance their reform agenda in key areas, including consolidating central bank autonomy, reforming corporate taxation, bolstering management of state-owned enterprises, and improving cost recovery and regulation in the power sector”.

IMF has further stated that “the IMF Executive Board has completed the combined 2nd through 5th reviews of the Extended Arrangement under Extended Fund Facility (EFF) for Pakistan, allowing for an immediate purchase equivalent to about US$500 million for budget support bringing total purchases for budget support under the arrangement to about US$ 2 billion”.

SBP has presented its views on appreciation in foreign remittance by stating that “proactive policy measures by the Government and SBP to encourage more inflows through formal channels, limited cross border travel in the face of the Covid-19, medical expenses and altruistic transfers to Pakistan amidst the pandemic, and orderly foreign exchange market conditions are continuing to contribute to this sustained rise in workers’ remittances.”

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