Purchase of Modaraba certificates, shares: FBR proposes withdrawal of CVT

The Federal Board of Revenue (FBR) has proposed withdrawal of Capital Value Tax (CVT) on purchase of Modaraba certificates and shares, besides withdrawing the powers granted to the registered stock exchange(s) for collecting CVT. According to analysis of Ernst & Young Ford Rhodes Sidat Hyder of Finance Bill 2011, the Finance Act, 1989 introduced for the first time a tax on the capital value of assets referred to as the CVT.
Presently, CVT is leviable on purchase/import of motor vehicle not previously used in Pakistan and purchase of Modaraba certificates and instruments of redeemable capital by a resident person. The finance bill 2011-2012 has proposed to withdraw the levy of CVT on purchase of Modaraba certificates and instruments of redeemable capital listed on any registered stock exchange(s) in Pakistan. Consequentially, the Bill also seeks to withdraw the powers granted to the registered stock exchange(s) for collecting CVT on such certificates and instruments.