KARACHI: The Federal Board of Revenue (FBR) has reached out to stakeholders to bring about tax reforms in the capital markets to attract more foreign and local investors, s
According to media reports. FBR has formed a high-level committee on capital markets tax reforms headed by Member Inland Revenue (Policy) FBR.
Other members of the committee will include SECP Commissioner Securities Market Division Shauzab Ali, Pakistan Stock Exchange (PSX) Chief Executive Officer Farrukh Khan, PSX Chief Financial Officer Ahmed Ali Mitha, and FBR chief (income tax policy) as secretary.
Sources, informed the publication, that the committee would review tax policies and suggest specific short-term and medium to long term measures for the development of debt and equity market, commodity futures, mutual funds, real estate investment trusts, corporate and insurance sector, amongst others. They said that the committee will act as a forum till budget-making exercise for the fiscal year 2021/22 starts.
The committee will also review and recommend all measures that impinge upon the capital markets and its stakeholders.
The sources told The News that the committee has been given the powers to seek proposals from relevant stakeholders, deliberate and finalise tax reforms.
The committee is expected to prioritise the proposals after receiving them and placing them under the immediate, medium-term and long term reforms categories.
The sources further said the committee would submit its initial report by the end of this month. Further, necessary amendments to the tax laws would be initiated in consultation with the committee for implementation of the agreed proposals.
Earlier, the stock market in its proposals for the last budget had informed the government that the capital market had seen robust growth over the years in terms of its market capitalisation. However, it had stated that the global downturn and coronavirus lockdown had decreased market capitalisation.
Market capitalisation that rose to around Rs8 trillion earlier this year spiralled down to Rs5.7 trillion on April 1 last year as a result of the coronavirus-driven global downturn.
“The government must consider adopting long term measures to promote savings and investment and development of the capital market,” the PSX said in its proposals.
“The core principle of our proposal is aimed at increasing the size and depth of the capital market by incentivizing the listing of new capital without impacting government revenues. Most proposals are revenue neutral and, in cases, likely to increase the government’s revenue.”
The PSX focused on removing disincentives, the incidence of double and at times multiple taxations that are penalising capital formation.