PSX recommends to bring down rate of CGT to 10 %
KARACHI: Pakistan Stock Exchange (PSX) has recommended that the rate of Capital Gains Tax be brought down to 10 per cent for short term investments and be made nil for long term investments.
This will bring it in line with international and regional levels, as well as the changes proposed by the government for real estate, said a statement on Wednesday.
It said that a review of CGT on listed securities has now become even more urgent and important in view of the changes made in the CGT structure on real estate. This creates a tax driven distortion between the capital markets and real estate, and discriminates against the capital markets, which are fully documented.
Only Rs 1.3bn was collected as CGT last year and the proposed changes will bring in new tax payers and increase tax revenue. This will be a significant and welcome headline change which will attract new domestic and international investors to Pakistan’s capital markets, without any negative revenue impact.
It is important to have a tax structure that attracts funds from the informal and undocumented part of the economy towards the documented capital markets. This will help create new tax payers and increase Pakistan’s low savings rate, one of the critical structural imbalances in Pakistan’s economy. - APP