PSX Submits Budget Proposals for Growth of Capital Markets

Pakistan Stock Exchange (PSX) has presented crucial proposals for the Federal Budget 2022-23 to address economic challenges, boost the national economy, and grow the capital markets. Implementation of the proposals will help document the economy and increase tax revenues while helping meet vital social objectives. These proposals have been submitted to the Federal Minister for Finance and Revenue, Chairman SECP, and Chairman FBR for their consideration. The proposals have been prepared to keep in mind the current economic challenges faced by the country. The stock market is one of the most documented sectors of the economy. In line with FBR’s efforts to increase the tax base in Pakistan, the stock market and its stakeholders, investors, and issuers, are all well documented and comply with the relevant tax laws. However, it is imperative that there is an efficient, equitable, and broad-based tax system to enhance and augment corporatization and the capital markets. PSX has presented budgetary proposals that focus on impediments and disincentives that have created obstacles to the development of the capital market, the documented corporate sector, and the overall economy. The implementation of these proposals will help increase tax revenue, encourage investment and saving, and contribute to economic growth. PSX submitted 11 budgetary proposals for 2022-23 affecting the capital markets. Some of the key proposals presented are: The budgetary proposals seeking to benefit the economy through growth of the capital market include alignment of 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 introduction of RSIAs & ISAs to help channel savings towards productive investments, no new cases for past tax returns be opened to facilitate tax status at the time of a company’s listing application in order to encourage companies to list, rationalization of tax rates for listed companies through reinstatement of the repealed section 65C of the Income Tax Ordinance, 2001, amended to allow the tax credit to certain companies meeting the prescribed requirements of free float, leveling tax for corporates to remove the inequality of taxation of businesses and restoration of exemption on inter-corporate dividend between companies eligible for group taxation, among other significant proposals. Speaking about the budgetary proposals presented to the Ministry of Finance and key relevant government functionaries, the MD PSX, Farrukh H. Khan, stated, The MD PSX added, “As a frontline regulator, PSX is keen to see that necessary reforms are implemented in the taxation system so that all asset classes have the same tax treatment. This will facilitate efficient resource allocation, documentation of the economy, increased tax revenue, and growth of the capital market, thereby creating a solid foundation for a thriving and flourishing economy.”