ISLAMABAD: The Security and Exchange Commission of Pakistan (SECP) has shared with the Federal Board of Revenue (FBR) some key tax proposals considered to be critical for capital markets and corporate sectors.
An SECP official told APP that the shared proposals were at a preliminary stage of discussion with FBR.
“SECP had a first round of discussion with FBR officials and the next round of discussion would follow soon. None of them have been finalised or approved as yet.”
He said in order to unlock the potential of private funds, proposals to allow perpetual pass through status to all categories of private funds have been recommended.
“Further, considering revamping of regulatory regime and introduction of Private Funds Regulations 2015, consequential changes have been requested in the income tax laws.”
He said the proposal to promote documented REIT structures aim to address short term and inadequate tax incentives for the real estate sector. These include allowing perpetual pass through status covering all categories of REITs, granting exemption from capital gains, taxation of dividends from REITs and advance tax on transfer of property, he added.
“Reduced cost of doing business in the insurance sector is essential for increasing growth and penetration. As insurance enables risk mitigation and addresses financial fragility issues, taxation at federal and provincial levels on insurance is proposed to be rationalized. FBR’s support is sought for proposals relating to provincial taxes and excise duty with a committee constituted to inter alia look into the harmonisation of provincial taxes.”
Another proposal was floated for the development of regulated commodity market by addressing the issue of withholding tax on physical settlement. Applicability of withholding tax on the sale of commodities in case of physical settlement of trades through Pakistan Mercantile Exchange platform has been proposed to be exempted.
“As inequality of taxation between incorporated and unincorporated businesses is discouraging corporatisation and documentation, different options are being considered to reduce this inequality over a period of time,” he stated.
Considering the market condition, a reduction in CGT rates for two years on disposal of listed securities has also been proposed.