The Securities and Exchange Commission of Pakistan (SECP) has asked the Federal Board of Revenue (FBR) to exempt debt instruments from Capital Value Tax (CVT) for the development of secondary securities market from fiscal (2009-10). In this connection, the FBR is seriously examining the budget proposals of the SECP.
The SECP has proposed that the capital value tax should not be collected in case of debt instruments in order to develop the secondary market for these securities. At present, the debt securities, though listed at the stock exchange, but are not actively traded and the capital value tax collection hinders the growth in the secondary market for debt securities. Hence, the said amendment has been proposed in order to promote and facilitate the development of secondary market for debt instruments.
According to the proposed amendment in the Finance Act 1989, the capital value tax shall be collected by the person responsible for registering or attesting the transfer of the asset in respect of which the tax is payable, at the time of registering or attesting the transfer:
Provided that in case of motor vehicle when purchased from a manufacturer in Pakistan, the capital value tax shall be collected by such manufacturer before making the delivery of the said vehicle:
Provided further that the Collector of Customs shall in case of every motor vehicle imported into Pakistan, at the time of customs clearance, collect capital value tax on the basis of the value of such vehicles as increased by the customs duty, sales tax, income tax and any other charges payable before removal from customs area, if any, levied thereon, at the rates specified in clause II of paragraph C of sub-section (2). Provided further that a registered Stock Exchange in Pakistan shall collect Capital Value Tax on the purchase value of Modaraba certificate or shares of a public company from the resident person.
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