KARACHI: The bone price may cross Rs200 with the unforeseen duty of a withholding duty on exchange companies, which are getting notices to the tune of hundreds of millions of rupees from the Federal Board of Profit (FBR).
Representatives of the exchange companies told Dawn on Wednesday they’re getting notices from the FBR on remitment of the withholding duty that was withdrawn in 2016.
Duty notices have created fear among the exchange companies while their representatives contend the added cost will be passed on to guests, which may push the bone rate beyond Rs200.
“ The exchange companies are getting notices to pay up to Rs1 billion in withholding duty. It was enforced in 2014 and withdrawn in 2016,” said Malik Bostan, president of the Exchange Companies Association of Pakistan.
He said the companies will pass on the 16pc withholding duty to guests who’ll have to bear the added cost of over to Rs20 per bone. This will affect the exchange rate of Rs200 or advanced.
“ It looks like a conspiracy against the government. There’s a lot of pressure on the exchange rate. The government is formerly facing review due to the devaluation,” he said.
The black request will replace the legal business of the exchange companies if the bone reaches Rs200, he said.
“ The slate request has formerly taken a big knob of our business. It offers an advanced price. Bones are being vented at advanced rates to bootleggers, hawala people, and Afghans,” said Zafar Paracha, who runs one of the country’s largest exchange companies and also serves as general clerk of the same association.
An ‘A’ order exchange company that didn’t want to expose its identity participated in its FBR notice with Dawn. It showed the quantum of over Rs1bn in withholding duty. The exchange company said it’ll pass this on to the currency request and the bone rate will shoot. The bone closed at Rs178.30 on Wednesday.
Mr. Bostan said assessing the withholding duty makes no sense as the request is formerly unpredictable and the government is under pressure. “ In a meeting with the FBR president, we informed him about the consequences of the 16pc withholding duty,” he said.
He noted that the FBR president assured the exchange companies that the notices would be withdrawn and that the companies would not face any importunity at the hands of the taxmen.
In recent history, the exchange companies faced a number of restrictions with regard to their deals, although their businesses are completely proved, he said.
The government along with the State Bank of Pakistan took these measures to regulate this business in view of the Financial Action Task Force. Pakistan is in compliance with the utmost of the FATF conditions, although it’s still on the slate list of the watchdog that compels the authorities concerned to keep this business under tight control.
At the same time, the government also wants to get control of the exodus of bones from the country.
