ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) and Federal Board of Revenues (FBR) here on Thursday signed an important memorandum of understanding (MoU) on sharing of information for the documentation of economy, broadening of tax base and mutual consultation on fiscal policy measures for non-banking financial sector, insurance, and capital markets.
SECP Chairman Muhammad Ali and FBR Chairman Mumtaz Haider Rizvi signed the MoU at SECP Headquarter and exchanged the copies of MoU for promoting cooperation in information sharing between the two organisations and develop cooperative linkages for enforcement of laws. Senior officials of the FBR and SECP were also present. SECP Chairman Muhammad Ali, after the signing ceremony, informed that the MoU recognised the need for cooperation and coordination between SECP and FBR to effectively carry out their respective statutory responsibilities and maintain the highest level of oversight quality, while minimizing duplication of efforts.
The representatives of both institutions will meet regularly to coordinate efforts to undertake policy dialogue for achieving uniformity in regulatory approach for sectors under their respective purview and achieving the objectives of the MoU. This is a unique MoU as it would help proper sharing of information of data, which would help facilitate documentation of economy and broadening of tax base in the country.
SECP Chairman informed that both FBR and SECP would be able to exchange required information on formal request under the MoU. The information sharing has been formalised following signing of this MoU. The SECP official, while recognising the importance of MoU, said the SECP had already signed such kind of MoU with State Bank of Pakistan.
SECP Chairman said that MoU was signed in the backdrop of evolving challenges being faced by Pakistan that necessitated various institutions to develop cooperative linkages for enforcement of laws. The MoU stipulates that the SECP and FBR will hold consultation on fiscal policy measures pertaining to non-banking financial sector (NBFC, insurance, and capital markets) and corporate sector to encourage documentation of economy, promotion of long-term saving culture and corporatisation.
The SECP had established bilateral cooperation arrangement with counterpart banking sector regulator - the State Bank in 2003 and updated the cooperation arrangement in 2009 extending the cooperation parameters over the areas like AML/CFT in financial sector, conglomerates and financial inclusion etc. The mechanism was effective in operation and both regulators hold periodic meeting to deliberate on policy areas that impact whole of financial sector of the economy," he said.
He also said that both FBR and SECP would jointly work on fiscal measures to promote corportisation in the country. Explaining the fiscal measures, he said that SECP wants corporate tax rate should be brought down from existing level for corporate entities.
He said SECP would discuss its budget proposals with FBR next week and in this regard SECP had already asked stock exchanges, and other private sector associations to forward their tax proposals to SECP so as that those could be taken up in next meeting.
He said that workable proposals and proposals on merit received from the private sector would be proposed to FBR for promotion of sectors being governed by SECP. Responding to a question on Parliament's Joint Session, SECP Chairman said that SECP would seek approval to Demutualisation of Stock Exchanges Law and Mudarba Companies Laws during this session.
Welcoming the signing of the MoU, Muhammad Ali said MoU reiterated the commitment of the SECP and FBR to work together in ensuring a conducive environment for businesses and investment. It will enhance cooperation between the two institutions and establish a framework for collaboration, coordination and sharing of information in areas of common regulatory and supervisory interest for furtherance of objectives of SECP and FBR.
Responding to various queries, FBR Chairman Mumtaz Haider Rizvi was confident that FBR would achieve at all costs the annual tax collection target of Rs 1.952 trillion by June 30. Demonstrating full confidence in the tax machinery, FBR Chairman acknowledged remarkable growth in revenue collection during 2011-2012. The FBR has provisionally collected Rs 1.123 trillion during first eight months (July-February) period of ongoing fiscal year, reflecting an exceptional growth trend. The FBR has to adjust around Rs 5 billion input tax out of the GST on Services collected by Sindh.
FBR Member Inland Revenue Shahid Hussain Assad informed reporters that MoU would help streamline the information sharing between the two regulatory bodies and aim was to properly document the economy and broaden the tax base. Documentation of economy and broadening of tax base is in larger interest of the economy, he added.
On the MoU signing between the SECP and FBR, Shahid Hussain Asad further said that it would go long way in documentation of economy, broadening the tax base and expanding the tax net. The MoU would primarily improve relationship between the SECP and FBR through proper coordination between the two organisations. Earlier, the SECP gave a briefing on its role, and responsibilities, and an overview of the corporate sector, capital markets, NBFIs and insurance sector. The briefing also included the SECP's road map and future strategy for regulated entities including the requisite fiscal reforms and highlighted the broad tax proposals which will be shared with the FBR for inclusion in Finance Bill 2012-13.
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