PBC opposes SECP’s investment clause

Amnesty scheme to allow investment without disclosure of source.


Our Correspondent March 22, 2012

KARACHI: The Pakistan Business Council (PBC) has opposed certain provisions in capital gains tax amendments proposed by the Securities and Exchange Commission of Pakistan (SECP) for stock market trading.

Specifically, the provision of allowing investment without disclosing source of income to funds from 1st April 2012 to 30th June 2014 in the stock exchanges without disclosure of source of income is particularly objectionable. This could potentially become a major route for laundering of funds generated from illegal sources, says a press statement issued by PBC.

The Federal Board of Revenue, in the last two decades, has announced two tax amnesty schemes to allow declaration of undisclosed funds and wealth to bring these in the tax net. Both schemes failed to augment any large scale declaration of undisclosed funds.

Such an amnesty scheme will directly impact capital market activity, which in turn can influence genuine investor behaviour and lead to distortion of capital allocation.

PBC, on the other hand, supports other provisions in the proposed amendment meant to facilitate and make transparent the computation of CGT by National Clearing Company of Pakistan (NCCPL) as well as freezing the present rates of CGT till 2014.

Published in The Express Tribune, March 22nd, 2012.

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