PSX submits FY23 budget proposals
Tax reforms will facilitate efficient resource allocation, documentation of economy, increased tax revenue and growth of capital market, thereby creating a foundation for a thriving and flourishing economy. Photo: File
No modern economy can grow and improve savings and investment rates without large and well-functioning capital markets, Pakistan Stock Exchange (PSX) Managing Director Farrukh H Khan emphasised.
“The stock market in Pakistan is the most documented sector of the economy but is still discriminated against,” he said, adding that there were serious tax and AML distortions between asset classes that must be rationalised as “they are detrimental to efficient resource allocation”.
Keeping that in mind, the Pakistan Stock Exchange (PSX) presented important proposals for the federal budget 2022-23 to address economic challenges, boost the national economy and grow the capital markets, said a statement issued on Thursday.
“Implementation of the proposals will help to document the economy and increase tax revenues, while also helping to meet important social objectives,” it said.
PSX submitted 11 budgetary proposals for fiscal year 2022-23 affecting the capital markets including introduction of Registered Savings and Investment Account (RSIA) and Individual Savings Account (ISA) to help channel savings towards productive investments.
Moreover, the proposals included alignment of capital gains tax (CGT) on disposal of securities with that of other regional exchanges and sale of immovable property in order to essentially eliminate the tax-driven distortion between different asset classes.
The PSX sought rationalisation of tax rates for listed companies through reinstatement of the repealed Section 65C of the Income Tax Ordinance 2001, amended to allow tax credit to certain companies meeting the prescribed requirements of free float.
It also called for levelling tax for corporations to remove inequality of taxation and restoration of exemption on inter-corporate dividend between companies eligible for group taxation.
These proposals were submitted to the federal minister for finance and revenue, Securities and Exchange Commission of Pakistan and Federal Board of Revenue chairman for their consideration.
“As capital markets grow, the economy will get documented and tax revenue will increase,” Khan remarked, adding that all the recommendations of the PSX were “revenue positive”. “We do not ask for subsidies; only a level playing field.”
The managing director of the bourse said, “As a frontline regulator, PSX is keen to see necessary reforms are implemented in the taxation system so that all asset classes have the same tax treatment.”
This would facilitate efficient resource allocation, documentation of the economy, increased tax revenue and growth of the capital market, thereby creating a foundation for a thriving and flourishing economy, he added.
“In line with FBR’s efforts to increase tax base, the stock market and its stakeholders, investors and issuers, are all well documented and comply with the relevant tax laws,” the statement said.
“However, it is imperative that there is an efficient, equitable and broad-based tax system to enhance and augment corporatisation and capital markets,” it added.
Published in The Express Tribune, April 29th, 2022.
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