The Federal Board of Revenue has agreed to a budget proposal of the Securities and Exchange Commission of Pakistan (SECP) to increase the tax credit from 5 to 10 percent for three years on enlistment of new companies on the stock exchanges in the country.
Sources told Business Recorder here on Friday that the SECP has proposed the FBR to enhance the tax credit for enlistment on stock exchanges during budget (2011-12). According to the SECP, the existing tax credit incentive to a new listing company makes effective tax rate 33.25 percent only for one year.
The amount of this tax credit for enlistment is proposed to be raised to at least 15 percent of the tax payable, which will mean an effective tax rate of 29.75 percent instead of 35 percent. Further, the tax credit should be for at least first five years of enlistment, the SECP added.
According to sources, FBR is seriously considering the budget proposal of the SECP to increase the rate of tax credit for enlistment of new companies on the stock exchanges. It would be a major incentive for the new companies to get themselves enlisted on the stock exchanges. Under the existing provision of the section 65C of Income Tax Ordinance, 2001, where a taxpayer being a company opts for enlistment in any registered stock exchange in Pakistan, a tax credit equal to five per cent of the tax payable shall be allowed for the tax year in which the said company is listed.
The proposed amendment of section 65C of Income Tax Ordinance, 2001 as submitted by the SECP said that where a taxpayer being a company opts for enlistment in any registered stock exchange in Pakistan, a tax credit equal to 15 per cent of the tax payable shall be allowed for the tax year in which the said company is listed and subsequent four tax years, proposed amendment added. Instead of 15 percent the FBR has agreed to allow tax credit of 10 percent on enlistment of new companies on the stock exchanges, sources added.
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