PSX tax proposals: ‘Will help raise equities of around Rs250b’

Leading businessman says rationalisation of taxes will have positive impact

KARACHI: Tax proposals by the Pakistan Stock Exchange (PSX) for the 2016-17 budget will help raise equities of approximately Rs250 billion for privatisation and China-Pakistan Economic Corridor (CPEC) projects, prominent industrialist Arif Habib said on Thursday.

Speaking at a pre-budget press briefing at the PSX, Habib said implementing the tax proposals will lead to rapid growth in GDP by mobilising necessary financial resources for investments in the economy.



He said the rationalisation of taxes, such as bonus tax, capital gains tax and capital value tax as well as the taxes on Real Estate Investment Trust (REIT) schemes and listing tax incentives, will have a combined revenue impact of 0.4% of the PSX’s total tax contribution estimated to be Rs670 billion.

According to PSX Chairman Muneer Kamal, the government is the biggest beneficiary of the stock market’s performance because it has raised Rs453 billion since 2003 through privatisation deals. In addition, the government also received Rs14 billion in investment profits from NIT in 2013-14 alone, he added.

The PSX has demanded that the tax on the issue of bonus shares be removed because it has no significant impact. “It is only an accounting entry and has discouraged companies from issuing bonus shares since its introduction,” Habib said.



He also proposed rationalising capital gains tax (CGT) by reducing its rate to 10% from 15% in the case of a security where the holding period is less than six months.

A tax rebate of 20% for one year on the listing of new companies was also introduced in the last budget. The PSX has proposed this rebate be extended for five years to encourage more companies to list.

Published in The Express Tribune, May 27^th, 2016.

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