KARACHI: Pakistan’s senate will on Monday discuss a controversial proposal by the country’s tax body to impose a 5 percent levy on the “digital revenues” of foreign firms such as Facebook, Google and Twitter that are active in the country.
The Federal Board of Revenue on Friday proposed including the new tax in the country’s federal budget for 2018-19. The tax, which was reportedly proposed by the FBR without consultation from the companies it is targeting or Pakistan’s ministry of commerce, was condemned by both the government and the opposition.
But the move will still be debated in the upper body of Pakistan’s parliament on Monday, Senator Aurangzeb Khan, member of the senate’s committee on finance, revenue, economic affairs and narcotics, told Arab News.
“We asked the FBR to give us the surety that the tax burden would not be shifted on to the public but their reply was not satisfactory,” he said.
“However, if they give us a guarantee that the burden would not be passed on to the general public then we will give approval.”
“We will consider the interest of Pakistan.”
Discussions will also be held in parliament’s national assembly; if approved, the measure could come into law. Even if approved, the measure is likely to have minimal impact on the likes of Facebook and Google, given their limited physical presence in the country, according to experts.
“In (the) current situation they cannot impose tax on these companies because they do not have any physical presence,” said Badar Khushnood, co-founder of digital media and marketing agency Bramerz.com, and a former employee of Facebook, Twitter and Google in the country.
The Ministry of IT did not do anything to invite these countries to set up office in Pakistan, Khushnood said, adding only companies that have a physical presence could be brought under such taxation measures.
Pakistan’s IT is still in a nascent stage that can not afford any such tax measures, according to Pervaiz Iftikhar, an IT expert and consultant.
“This is not the first time that our government is taking measures (like this). Such measures have failed in the past,” Iftikhar told Arab News, saying “such measures will (prompt) the companies to quit which will have a negative impact on the country’s growing IT sector.”
But some analysts favor the move of imposing taxes on global tech
giants operating in the country.
“These companies are generating revenues from Pakistan that are much more than some of our own companies. If these companies are taxed it would ultimately benefit Pakistan,” said Aamir Atta, founder of propakistani.com, a web-based news site.
A potential way to generate tax revenue from the likes of Google and Facebook would be to target local firms used by such companies to host their sites, according to Amjad ullah Khan, CEO of local IT firm Amjad Ahsan Infotech.
“Many Pakistani companies are hosting their websites and generating revenues in million of rupees; they should be brought under the tax net,” Khan said.
Pakistan to debate controversial 5 percent ‘digital revenues’ tax
Pakistan to debate controversial 5 percent ‘digital revenues’ tax
- Proposal floated by tax body has been condemned by the government and opposition
- Tax forecast to have little impact even if it's approved by parliament
G7 countries to release oil reserves as IEA agrees to largest ever market intervention
- IEA recommends release of 400 million barrels
RIYADH: Germany, Japan and Austria will release part of their oil reserves after the International Energy Agency recommended the release of 400 million barrels of oil from stockpiles, the largest such move in IEA history.
In a statement, IEA Executive Director Fatih Birol said the flow of oil, gas and other commodities through the Strait of Hormuz have all but stopped, leading global energy supply to fall by around 20 percent.
Ahead of the confirmation of the move — a larger intervention than the 182.7 million barrels that were released in 2022 by in response to Russia’s invasion of Ukraine — several countries began setting out plans to bring their reserves into play as countries grapple with soaring crude prices amid the US-Israeli war with Iran.
Birol said: “I can now announce that IEA countries have decided to launch the largest ever release of emergency oil stocks in our agency's history.
“IEA countries will be making 400 million barrels of oil available to the market to offset the supply lost through the effective closure of the strait.
“This is a major action aiming to alleviate the immediate impacts of the disruption in markets.”
Germany’s Economy Minister Katherina Reiche confirmed on Wednesday her government plans to limit petrol price increases at filling stations to once a day and to introduce more stringent antitrust regulation of the sector.
She did not give an exact timing for those measures, but added that the US and Japan would be the largest contributors to the release of the oil reserves.
The US has not confirmed it would do so, but its Interior Secretary Doug Burgum told Fox News on Wednesday that “these are the kinds of moments that these reserves are used for.”
The announcements did not stop oil prices rising, with Brent crude up 3.26 percent to $90.66 a barrel at 4:29 p.m Saudi time, and West Texas Intermediate up 3.12 percent to $86.05. Both were some way below the $119 a barrel seen earlier in the week.
“The situation regarding oil supplies is tense, as the Strait of Hormuz is currently virtually impassable,” Germany’s Reiche said.
“We will comply with this request and contribute our share, because Germany stands behind the IEA’s most important principle: mutual solidarity,” Reiche said about the IEA’s request.
According to a statement by Reiche’s ministry, Germany will contribute 2.64 million tonnes of oil. This corresponds to 19.51 million barrels.
Reiche stressed there was no supply shortage in the country, which has a legally mandated reserve of oil and oil products intended to cover 90 days’ demand.
South Korea will release 22.46 million barrels of oil, which represents 5.6 percent of the total IEA ask, the country's industry ministry said.
“The government will consult with the IEA secretariat on details, such as the timing and amount, from the perspective of national interests in accordance with domestic conditions,” the ministry said in a statement.
The ministry said it would continue to coordinate closely with major countries in responding to high oil prices to minimise any domestic impact.
Austrian Economy Minister Wolfgang Hattmannsdorfer said his country was releasing part of the emergency oil reserve and extending the national strategic gas reserve, adding: “One thing is clear: in a crisis, there must be no crisis winners at the expense of commuters and businesses.”
Acting ahead of the IEA move, G7 member Japan announced plans to release 15 days' worth of private-sector oil reserves and one month's worth of state oil reserves.
“Rather than wait for formal IEA approval of a coordinated international reserve release, Japan will act first to ease global energy market supply and demand, releasing reserves as early as the 16th of this month,” Prime Minister Sanae Takaichi said in a broadcast statement.
Following a meeting with the IEA on Wednesday, G7 energy ministers said: “In principle, we support the implementation of proactive measures to address the situation, including the use of strategic reserves.”
All IEA member countries are required to keep 90 days’ worth of their nation’s oil use in reserve in case of global disruption.
