PSX Seeks Resolution on Sales Tax at CCI Meeting
The PSX's efforts to resolve the sales tax issue and implement reforms are expected to have a positive impact on the stock market and the economy, as they will help to create a favorable business environment, encourage investment, and promote economic growth. The implementation of a unified revenue-sharing formula and the elimination of minimum tax for listed companies will help to boost market growth and encourage foreign investment.
The Pakistan Stock Exchange (PSX) has called on the federal and provincial governments to resolve the issue of jurisdictional differences over the collection of sales tax on services at the Council of Common Interests (CCI), seeking a unified revenue-sharing formula for provinces to address overlapping tax laws.
The stock exchange has proposed reforms in the minimum tax regime, elimination of minimum tax for listed companies, and tax credits for small and medium enterprises (SMEs) to boost market growth. Additionally, the PSX has suggested aligning capital gains tax rates with those on immovable property, harmonizing CGT rates for derivatives and future contracts, and providing tax relief to encourage foreign investment in the market. The PSX has urged the federal and provincial governments to resolve the issue of jurisdiction differences among provinces over the collection of sales tax on services, which is affecting the entire services sector, including firms listed at PSX.
The Pakistan Stock Exchange has requested that the issue be placed on the agenda of the Council of Common Interests (CCI) to devise a sharing formula for each province. The bourse highlighted that the dispute over collection of sales tax on services is affecting the entire services sector, including firms listed at PSX, which facilitated trade in shares of around 550 companies with a total market capitalization of Rs14.73 trillion (around $52 billion). The PSX has also proposed eliminating the minimum tax regime from listed companies, enhancing tax credit for listed small and medium enterprises (SMEs), and aligning rates of capital gains tax (CGT) on disposal/sale of securities with rates of CGT on sale of immovable property.
The resolution of the sales tax issue and implementation of the proposed reforms are crucial for the growth and development of the stock market and the overall economy. The PSX's proposals aim to create a favorable business environment, encourage investment, and promote economic growth, which is essential for the country's prosperity. The federal and provincial governments must work together to address the jurisdictional differences and implement a unified revenue-sharing formula to support the services sector and the stock market.