CVT alternatives being discussed

Three new proposals including taxing carryover transaction (COT), brokerage commission and difference in bill of daily trading were deliberated upon by the government and three bourses'' chiefs, as Ministry of Finance has agreed in principle to withdraw the CVT levy.
Brokerage commission is almost Rs 500 million at the rate of 5 percent, which will reach nearly Rs one billion by making it 10 percent. The ''difference bill'' is the difference in earning on buying and selling of shares in a day.
The COT (Badla financing) is lending money for daily trading. Currently, Badla share is at 13-14 percent in the market, which can be taxed.
Sources also said that the government has agreed on the issue of not levying CVT and go for alternative modes of taxation.
The CBR had estimated Rs 7-9 billion earnings from 0.1 percent CVT, but according to the market sources this levy would severely affect the trading environment.
The government reduced the target of CVT to Rs 4 billion and further slashed it to Rs 1.25 billion during discussion with the representatives of the three stock exchanges on Sunday night. However, other sources present in the meeting denied of any figure, saying that different figures were discussed without reaching an agreement.
While a statement was faxed by the Finance Minister''s office for heads of three stock market''s saying that the government is fully aware of the situation prevailing in the market and a committee has been formed for resolving the matter.
Meanwhile, according to Islamabad Stock Market''s MD, Chaudhry Aftab no amount has been fixed by any of the two parties in the meetings.
ISE Chairman Omer Iqbal Pasha said the government has agreed in principle to withdraw CVT, which would be replaced with other taxation measures to collect the same amount of tax as proposed in case of CVT levy.
The stock exchanges have proposed to assist CBR for collection of tax on trading gains and voluntary payment of tax on brokerage commission.
Earlier, CBR chairman Abdullah Yusuf addressing a press conference said that a committee has been set up taking one member each from three stock markets, SECP and CBR.
Finance Minister Shaukat Aziz had asked the SECP and CBR to resolve the issue inviting chairmen and managing directors of Karachi Stock Exchange (KSE), Lahore Stock Exchange (LSE) and Islamabad Stock Exchange (ISE).
The Ministry of Finance issued a press release on Monday. It reads:
"The Federal Finance Minister, Shaukat Aziz, said that he met with the representatives of the three stock exchanges along with the chairmen of CBR and SECP on Sunday night to discuss the impact of the proposed levy of CVT on purchase of shares. He said that the government had meaningful discussions with the stock exchanges and has set up a committee comprising of the representatives from the three stock exchanges, SECP and CBR to discuss and identify alternatives.
The Finance Minister assured that the government will continue its full support for the development of the capital markets in the country and hoped that the issue will be resolved at the earliest."