Karachi: The Pakistan Stock Exchange (PSX) urges the government to rationalize the capital gains tax (CGT) structure in accordance with international best practices and reduce the tax rate, which is currently one of the highest in the region.
According to detailed information, only Rs 1.3 billion was charged as CGT last year, and the proposed changes will bring new taxpayers and increase taxes. This will be a major and welcome headline change, which will attract new domestic and foreign investors into Pakistan’s capital market without any negative impact on income.
It further stated that Pakistan’s capital market has been fully recorded. Therefore, it is important to establish a tax structure to attract funds from the informal economy and undocumented sectors to the documented capital market.
This will help create new taxpayers and increase Pakistan’s low savings rate, which is one of the serious structural imbalances in Pakistan’s economy. In view of the changes in the CGT structure of real estate, the review of CGT of listed securities has now become more urgent and important.
This creates a tax-driven distortion between the capital market and real estate, and discriminates against the well-documented capital market. This violates all the logic, fairness, and established policies of GoP and FBR, the latter of which aims to encourage economic records. This will also affect other related industries, including mutual funds, pensions and insurance.
PSX believes that the rationalization of CGT will have a positive impact on Pakistan’s economy and taxation. Both local and foreign investors will be attracted to the stock market, and more people will be included in the documented economic and tax network.
It should also be noted that since the budget announcement, the stock market has fallen by 1390 points, or 4%, highlighting the negative sentiment towards the budget announcement.