Only 2% of businesses are registered in Pakistan
SECP chief stresses the need for increasing company registrations.
Sole proprietors of firms and partnership ventures are taxed at 25% and exempted from audit, but listed companies pays 35% income tax and are subject to stringent audits by regulators. PHOTO: FILE
LAHORE:
Securities and Exchange Commission of Pakistan (SECP) Chairman Mohammad Ali has underlined the need for encouraging companies to get registered, while proposing rationalising the tax regime, as the current policy favours non-corporate entities that pay substantially less income tax than the corporate class.
Speaking to economic reporters of Lahore here on Monday, the SECP chairman said sole proprietors of firms and partnership ventures were taxed at 25% and were exempted from audit, but listed companies paid 35% income tax and were subject to stringent audits by regulators. “In developed economies, it is the other way round,” he said.
Ali pointed out that Pakistan had lagged far behind in corporate sector development. Citing the example of the United Kingdom, he said that with less than half of Pakistan’s population, the UK had two million registered companies with 300,000 new firms being registered every year.
In Pakistan, only 61,000 companies are registered against three million businesses, as per the State Bank of Pakistan’s statistics. “Only 2% of businesses are corporatised in Pakistan,” he said.
Ali said the capital market in Pakistan had been demutualised, as former brokers now had a 40% share in the demutualised exchange, while a 60% stake was with the government.
In the next 12 to 18 months, the former brokers – or previous owners of the stock exchange – will lose control over the market. 40% of these shares will be sold to a strategic investor – which will be a reputed global stock exchange – and 20% will be offered to the general public.
Ali believed that prices in Pakistan’s capital market were still very low, which would attract strategic investors.
He said that, until now, only registered takaful companies were offering takaful – Islamic insurance – but new rules also allowed conventional insurance companies to open a takaful window. However, takaful companies had secured a stay order from the court, but Ali hoped that after the vacation of the stay order this window would start operating.
Earlier, he said, all listed companies were required to maintain functional websites for facilitating shareholders, but now all private companies with a paid-up capital higher than Rs200 million would have to maintain a website to provide some information to small shareholders.
He also referred to the improvement in SECP’s rank from number 70 in 150 countries in 2011-12, to 55 in 2012-13 in the World Economic Forum Global Competitiveness Report. “This is a great achievement, as the first 40 capital market regulators are from developed economies,” he added.
Published in The Express Tribune, March 12th, 2013.
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Securities and Exchange Commission of Pakistan (SECP) Chairman Mohammad Ali has underlined the need for encouraging companies to get registered, while proposing rationalising the tax regime, as the current policy favours non-corporate entities that pay substantially less income tax than the corporate class.
Speaking to economic reporters of Lahore here on Monday, the SECP chairman said sole proprietors of firms and partnership ventures were taxed at 25% and were exempted from audit, but listed companies paid 35% income tax and were subject to stringent audits by regulators. “In developed economies, it is the other way round,” he said.
Ali pointed out that Pakistan had lagged far behind in corporate sector development. Citing the example of the United Kingdom, he said that with less than half of Pakistan’s population, the UK had two million registered companies with 300,000 new firms being registered every year.
In Pakistan, only 61,000 companies are registered against three million businesses, as per the State Bank of Pakistan’s statistics. “Only 2% of businesses are corporatised in Pakistan,” he said.
Ali said the capital market in Pakistan had been demutualised, as former brokers now had a 40% share in the demutualised exchange, while a 60% stake was with the government.
In the next 12 to 18 months, the former brokers – or previous owners of the stock exchange – will lose control over the market. 40% of these shares will be sold to a strategic investor – which will be a reputed global stock exchange – and 20% will be offered to the general public.
Ali believed that prices in Pakistan’s capital market were still very low, which would attract strategic investors.
He said that, until now, only registered takaful companies were offering takaful – Islamic insurance – but new rules also allowed conventional insurance companies to open a takaful window. However, takaful companies had secured a stay order from the court, but Ali hoped that after the vacation of the stay order this window would start operating.
Earlier, he said, all listed companies were required to maintain functional websites for facilitating shareholders, but now all private companies with a paid-up capital higher than Rs200 million would have to maintain a website to provide some information to small shareholders.
He also referred to the improvement in SECP’s rank from number 70 in 150 countries in 2011-12, to 55 in 2012-13 in the World Economic Forum Global Competitiveness Report. “This is a great achievement, as the first 40 capital market regulators are from developed economies,” he added.
Published in The Express Tribune, March 12th, 2013.
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