ISLAMABAD-The federal government has decided to suspend cryptocurrency services available on the internet in the country to prevent illegal digital currency transactions as per the guidelines of the Financial Action Task Force (FATF). The State Bank of Pakistan (SBP) and the Ministry of Information Technology have initiated work on banning cryptocurrencies, the Senate Standing Committee on Finance was briefed. The committee emphasised that digital financing should be banned and penalties should be imposed. It was also stressed that legislation should be framed and given a legal enforcement.
Minister of State for Finance and Revenue Dr Aisha Ghaus Pasha asserted that cryptocurrency will “never be legalised in Pakistan”, revealing that the Financial Action Task Force (FATF) has also imposed restrictions. “FATF had set a condition that cryptocurrency will not be legalised,” she maintained. SBP Director Sohail Jawad said that crypto transactions involve “high risk”; therefore, it will never be granted permission in Pakistan. “Cyrtocurrency is virtual currency and more than 16,000 types have been formed so far,” he said, adding that the $2.8 trillion market has now shrunk to $1.2 trillion.
Senate Standing Committee has decided to hold pre-budget meetings along with all the relevant stakeholders in order to restart the declining economy of the country. Senator Saadia Abbasi recommended to hold meetings calling upon all the stakeholders and hear their suggestions and concerns to be incorporated in the upcoming budget. The committee endorsed this view point and the meetings are likely to be commenced from next week. Earlier in the meeting the point of public importance raised by Senator Rana Mehmood Ul Hassan regarding sugar smuggling was disposed of. It was observed that the member concerned has not shown attendance twice besides, ample discussions has been made on smuggling and the Prime Minister has also taken initiative on the same, therefore the matter was disposed of.
Briefing by the SECP on media reports regarding proposed amendments to Non-Banking Finance Companies and Notified Entities Regulations proposing to increase its fees on AMC’s by over 350% to the original level, which was reduced after detailed deliberations by SECP policy board in FY20 was also taken up. The SECP officials said that there are no media reports in their knowledge. It was briefed that the policy board has the power and mandate to specify fees chargeable by the SECP and SECP implements the fees as approved by the policy board. It was briefed that the policy board of the SECP along with other private members comprises of Secretary Finance Division, Secretary Law, Secretary Commerce and Deputy Governor State Bank who are permanent members. It was apprised that the rates of fees have been revised to the level of 2019 after detailed deliberation and careful analysis in the financial position and autonomy of SECP. “It is not an increase but a reversion” the official remarked and said that the amendments have been made after detailed deliberation with industry stake holders including MUFAP. It was also debated that SECP is only charging annual fee from mutual funds whereas in other jurisdictions multiple fee including approval of funds, registration of fund, annual fees, filing fees are also imposed.
The committee was briefed by the FBR on the capital value tax on local and foreign assets of taxpayers introduced in the Finance Act 2022. It was briefed that CVT is levied on foreign assets of resident individuals exceeding Rs 100m in value, and motor vehicles exceeding battery power of 1300cc/50 kWh and similarly the value of assets to be determined in case of foreign assets is the total cost of foreign assets on the last day of the tax year converted into Pakistan Rs at SBP notified exchange rate as on 30th June, 2022. It was briefed that collection of CVT of Rs 3,194m and 6,045m from foreign assets has been made since the operationalising of this law. It was briefed that as a result of tax policy shift the direct tax collection has for the first time surpassed all individual indirect taxes as direct tax (Income tax/CVT) 45%, Sales tax 42 % and custom duty 13 pc. Senator Dilawar khan recommended direct tax collection at district level and said it will give fruitful results. Aisha Ghaus Pasha said that this has been tried earlier but was not workable. The chairman Committee called for an in camera meeting to take briefing on all such regimes and its implementation mechanism.
Briefing was also taken on the delay in implementation of the decision of the Finance Committee by Ministry of Finance regarding additional PSDP demand for project protection and upgradation of Pak-China OFC project for establishment of cross border connectivity (Dassi-Danyore alignment). Senator Umer Farooq regretted that new projects are being funded whereas projects near to completion are not allocated funds. The committee lamented the mismanagement and mysterious working of the ministry of IT & T and the planning commission on the allocation of funds and its disbursement. The chairman committee reiterated the release of funds of 608m rupees in order to close project. The committee sought report on the same from the IT ministry. The meeting was attended by Senators Farooq Hamid Naek, Saadia Abassi, Kamil Ali Agha, Umer Farooq and Dilawar Khan. State Minister for Finance Aisha Ghaus Pasha, Chairman FBR, Member customs FBR and officials from SECP and ministries of Finance and Revenue and IT were also in attendance.