KARACHI: Pakistan apex trade body has moved a proposals to authorities to legalize cryptocurrencies in the country.
In this regard, the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has recommended changes in tax laws to bring cryptocurrencies under tax net
The FPCCI recommended capital gain tax (CGT) at 15 per on income derived from disposal of cryptocurrencies.
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It further suggested that Pakistan must develop a regulatory framework and national cryptcurrency strategy.
“Cryptocurrencies should be defined among securities under Section 37A of Income Tax Ordinance, 2001 under which assets are charged at the rate of 15 per cent.” The Section 37A of the Ordinance deals with the collection of capital gain tax on disposal of securities.
The apex trade body also recommended imposition of withholding tax at the rate of one per cent, which should be adjustable, on transactions of cryptocurrencies.
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The FPCCI suggested a one-time asset declaration scheme must be launched. The scheme should include encashment of cryptocurrencies in Pakistan and converting the foreign exchange into the Pak Rupee may be allowed with no tax.
Further, it may be made mandatory the encashment of cryptocurrencies in Pakistan and held as deposit in foreign exchange accounts in Pakistan should be allowed with a rate of tax at five per cent.
The FPCCI further suggested related to the scheme that the encashment of cryptocurrencies in Pakistan and held as deposits in Roshan Digital Accounts should be allowed with 10 per cent tax for non-resident Pakistani nationals / dual nationals. “Holding of cryptocurrencies as an asset may be allowed to be declared on payment of 15 per cent tax,” it recommended.
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Giving the proposal to bring virtual currency under the tax net, the FPCCI said investment in cryptocurrencies started with speculative gaming but in recent years it had grown into humongous size. These assets which reside in digital clouds, need to be landed safely into the economic mainstream.
“The total trading value of Pakistani investors touched $20 billion in 2020-21 and the country ranked third in the Global Crypto Adoption Index,” the FPCCI said.
The apex trade body pointed out that recently the finance minister of India in her budget speech 2022 proposed to tax crypto-assets by 30 per cent on profits that occurred through transactions and 1 per cent TDS on every transaction of cryptocurrencies.
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Giving rationale to the proposal, the FPCCI said that virtual assets in countries like India, Thailand, Malaysia, UAE and many other countries are covered under tax laws which allow them to generate an additional revenue stream. “Coverage of these assets under the income tax regime in Pakistan will also help mobilize additional tax revenues,” it added.
