Relief for 'investors': Withholding tax on stocks to be scrapped: Tareen

[Naveed Yaseen]

By Tanveer Ahmed

KARACHI: Adviser to Prime Minister on Finance, Shaukat Tareen has agreed to end Withholding Tax (WHT) on the stocks trading as it is tantamount to double taxation in the presence of Federal Excise Duty (FED).

"Presumptive Tax Regime (PTR) in Value Added Tax (VAT) should be made adjustable and Federal Board of Revenue (FBR) would be recommended to do that", he told newsmen after meeting with the board of directors of Karachi Stock Exchange (KSE) here on Monday.

A KSE statement also said that Shaukat Tareen announced that he would advise the Federal Board of Revenue to: convert the tax being paid under PTR to be made adjustable (as compared to minimum) with final tax liability of members and to abolish the withholding tax applicable on the sale of shares transactions.

FED will be collected directly from Members as prescribed by the FBR. However, the audit process will be made transparent and hassle free. About the mode of collection of FED on brokerage commission, Tareen said that mechanism would remain unchanged and returns would be filed under Universal Self Assessment Scheme (USAS). However, independent auditor would scrutinise to avoid the harassment of brokers at the hands of tax officials.

Telling about his meeting with bankers, adviser said that it was held to discuss the financing for rental power plants and IPPs. "We discussed this issue thoroughly as well as the problems faced by the banking sector", he added.

Though banks are under pressure, he pointed out that they have been asked to help out the ailing industrial sector, which is hit by endogenous and exogenous shocks. He said that industry could progressively move ahead only with the help of banks and for that they would have to act proactively.

On piling of non-performance loans (NPLs), Tareen noted that banking sector has the strong capital base with the capability to overcome the problem of NPLs.

He disclosed that bankruptcy law would be implemented hopefully during this quarter as well as the Resolution Trust would help the ailing industries. About the need for a bankruptcy law, he said that liquidation law existed in the country, however the absence of a restructuring law has been badly felt since long and now the work towards this law is making smooth progress.

In reply to query about the inside trading in the stock market, Adviser said that Securities & Exchange Commission of Pakistan (SECP) has the mechanism to prevent this malpractice.

Earier, Shaukat Tareen briefed the KSE members about the current state of the economy, and commented that a significant part of the stabilisation efforts has been achieved. He also expected the monetary policy to reflect the impact of reduced inflation.

Tareen urged KSE members to play an active/leadership role in private equity and other forms of capital formation so that the Karachi Stock Exchange could be more integrated with the national economy.

He also advised the front-line and apex regulators to focus on market development including leverage products to ensure that vibrancy is maintained in the capital markets.

http://www.dailytimes.com.pk/default.asp...2009_pg5_1