PM, Asad Umer hint to reduce taxes on equity market: Sources

Aqeel Karim Dhedhi expressed his dissatisfaction over appointment of the SECP board member and specially its chairman Khalid Mirza

KARACHI: The stock brokers of the country have demanded from the Prime Minister Imran Khan to reduce different taxes on equity markets and its share trade as the higher taxes are creating problem for the stock market in Pakistan.

A leading broker Aqeel Karim Dhedhi expressed his dissatisfaction over the appointment of SECP board member and specially its chairman Khalid Mirza. He said that Khalid Mirza is not a suitable person for this post, a source in the meeting said. He also requested to appoint competent persons on the seat of chairman SECP board and SECP chairman.

In the meeting of PSX delegation lead by the Chairman Sulaiman S Mehdi, Board Members, prominent brokers and businessmen including Aqeel Karim Dhehdi, Arif Habib and Basheer Janmohammad. Prime Minister along with Asad Umar, Governor Sindh and other prominent members of the cabinet at the Governor House heard the issues of the brokers and agreed to revive the investors’ confidence.

The prime minister agreed to reduce Advance Tax of .02% on purchase and sale of shares (both sides) to 0.01%, however on the request of the Chairman the FM agreed to consider abolishing it completely. This has no tax revenue impact on GOP being an adjustable tax.

According to PSX Stockbrokers Association (PSA), Prime Minister was informed that out of total 550 stock brokers, only 239 members are now registered while the active brokers are 150 only.

“We are the marketing agents of Pakistan who market securities, listed on PSX and bring in foreign investments thereby foreign exchange for the country,” the PSA said in a statement released today.

“Without conducive environment, thereby, increasing Ease of Doing Business & reducing Cost of Doing Business – volume generation is not possible and without generating volumes it is not possible for any of the stakeholder to survive,” it said.

Earlier suggestion was to reduce rate of Advance Tax U/S 233A to 0.01%-adjustable or 0.005% final, but keeping in view the recent devaluation and increase in interest rate, it is strongly suggested to abolish it all together.

The statement said that for the last ten years huge tax refunds are not being paid to us. Our Working Capital is stuck in refunds. Like civilized countries law should be made that on completion of assessment, excess tax withheld be automatically refunded. This will bring in much needed liquidity, it added.

The statement said that Capital Gain Tax (CGT) be rationalized with the other class of investment – immovable property.

The government is missing revenues as FBR is not taking notice of a change in the definition of the term “Security” by a court order. FBR be directed to take suitable measures to counter its disastrous affect on corporate world.

Capital Loss on disposal of securities, in ready market falls U/S 59 while Speculation Loss on disposal of securities in derivative market falls U/S 58. It is illogical that carry forward of losses is not being allowed on disposal of securities u/s 37A.

Capital Value Tax (CVT) is collected on purchase of shares and was imposed in the absence of CGT, therefore, after the imposition of CGT, CVT must be abolished.

Tax on Dividend @15% is discouraging the Corporate Culture and tantamount to tax on already tax paid income. It may please be completely abolished or reduced to 10%.

Tax on Inter Corporate Dividends is discouraging the Corporate Culture and Holding Company Concept and it should be completely abolished.

To encourage listing on Stock Exchange, Corporate Tax for Listed Companies needs to be reduced so that some incentive is created for companies to get listed.

Cost of doing business – unnecessary paperwork giving rise to all sorts of audits – CDC audit, PSX audit, SECP inspection, ITT audit & inspection, internal audit, external half yearly and annual audit, NCB audit, LCB audit and so on and so forth and trust me all these audits have certain costs attached with it and then the requirement is only A category auditors.

Ease of doing business -KYC / AML duplication settlement of receivables and payable are only through cross cheques. This is creating additional burden and therefore cost.

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