Pakistan’s capital market has recommended tax exemption on income derived from foreign investments.
The recommendation is part of proposals of budget 2023-2024 submitted by the Pakistan Stock Exchange (PSX) to the finance ministry.
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In order to attract foreign investment and to support the depleting foreign exchange reserves, government has recently announced major relief for non-resident banking companies making investment in government debt securities, including treasury bills and Pakistan Investment Bonds (PIBs), whereby profit on debt and capital gains from such debt instruments shall be exempt from tax for these non-resident banking companies.
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A similar incentive for the capital market will not only benefit the struggling economy, but will also help restore local investors’ confidence in the market, which will eventually yield a positive impact in terms of tax revenue.
The PSX proposed to exempt income derived from foreign investment in order to attract foreign investors into the capital market.
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Giving rationale for the proposal, the PSX that this move will full further help inject foreign inflows into the foreign exchange reserves of the country.
Besides, it will also help foreign and local investors’ confidence in the capital market and economy, which will trigger increase in taxable activities in the market and consequently tax revenue.
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