AGL 39.15 Decreased By ▼ -0.85 (-2.13%)
AIRLINK 127.50 Decreased By ▼ -1.56 (-1.21%)
BOP 6.77 Increased By ▲ 0.02 (0.3%)
CNERGY 4.66 Increased By ▲ 0.17 (3.79%)
DCL 8.46 Decreased By ▼ -0.09 (-1.05%)
DFML 41.10 Increased By ▲ 0.28 (0.69%)
DGKC 82.00 Increased By ▲ 1.04 (1.28%)
FCCL 33.01 Increased By ▲ 0.24 (0.73%)
FFBL 73.40 Decreased By ▼ -1.03 (-1.38%)
FFL 11.77 Increased By ▲ 0.03 (0.26%)
HUBC 109.35 Decreased By ▼ -0.23 (-0.21%)
HUMNL 14.25 Increased By ▲ 0.50 (3.64%)
KEL 5.22 Decreased By ▼ -0.09 (-1.69%)
KOSM 7.60 Decreased By ▼ -0.12 (-1.55%)
MLCF 39.10 Increased By ▲ 0.50 (1.3%)
NBP 63.50 Decreased By ▼ -0.01 (-0.02%)
OGDC 192.50 Decreased By ▼ -2.19 (-1.12%)
PAEL 25.70 Decreased By ▼ -0.01 (-0.04%)
PIBTL 7.31 Decreased By ▼ -0.08 (-1.08%)
PPL 153.50 Decreased By ▼ -1.95 (-1.25%)
PRL 25.35 Decreased By ▼ -0.44 (-1.71%)
PTC 17.35 Decreased By ▼ -0.15 (-0.86%)
SEARL 78.15 Decreased By ▼ -0.50 (-0.64%)
TELE 7.56 Decreased By ▼ -0.30 (-3.82%)
TOMCL 33.22 Decreased By ▼ -0.51 (-1.51%)
TPLP 8.38 Decreased By ▼ -0.02 (-0.24%)
TREET 16.10 Decreased By ▼ -0.17 (-1.04%)
TRG 56.70 Decreased By ▼ -1.52 (-2.61%)
UNITY 27.50 Increased By ▲ 0.01 (0.04%)
WTL 1.36 Decreased By ▼ -0.03 (-2.16%)
BR100 10,476 Increased By 30.5 (0.29%)
BR30 31,021 Decreased By -168.2 (-0.54%)
KSE100 97,917 Increased By 118.9 (0.12%)
KSE30 30,532 Increased By 51.2 (0.17%)
Print Print 2020-03-24

MoF seeks tax exemption on $2.5 billion foreign loans

The Finance Ministry has sought tax exemption on foreign commercial loans of over $ 2.5 billion raised during the last one year, mostly from UAE banks, sources close to Finance Advisor told Business Recorder.
Published 24 Mar, 2020 12:00am

The Finance Ministry has sought tax exemption on foreign commercial loans of over $ 2.5 billion raised during the last one year, mostly from UAE banks, sources close to Finance Advisor told Business Recorder.
Giving the details, the sources said, under the Rules of Business, 1973, the Finance Division is responsible for arranging finances, including foreign exchange, to meet the current and development expenditure needs of the country and to maintain a sustainable balance of payment position. Raising foreign exchange on commercial terms from the international market is one important avenue for this purpose.
The Finance Division has executed the following financing agreements of $ 2.3825 billion since April 2019: (i) Master Murabaha Agreement- Dubai Islamic Bank- $ 225 million;(ii) Accession Facility Agreement-Credit Suisse- $ 50 million;(iii) term facility Master Murabaha and Accession Agreement- Emirates NBD- $ 500 million;(iv) Term Facility Agreement-Citibank-$ 150 million;(v) Term Facility Agreement- Credit Suisse - $155 million;(vi) Master Murabaha Agreement - Dubai Islamic Bank-$ 195 million;(vii) Master Murabaha Agreement- Ajman Bank- $ 157.5 million;(viii) Master Murabaha Agreement- Dubai Islamic Bank- $ 250 million and ;(ix) Term Facility Agreement- China Development Bank-$ 700 million.
Additionally, a trade financing facility of $ 200 million from Standard Chartered Bank is expected to be finalized in the coming weeks.
Rule 16 (1)(d) of the Rules of Business , 1973, stipulates placing of loan agreement before the federal cabinet for approval. Further these foreign commercial loans are offered on the condition that taxes applicable in Pakistan will not be borne by the lenders.
The option with the government is to either bear the cost of these taxes or grant exemption. Clause 75 of part 1 of the second schedule to the Income Tax Ordinance, 2001 empowers the federal government to grant exemptions on profit payments on money borrowed under a loan agreement.
The financing agreements were executed after clearance from the Ministry of Law and Justice. Similarly, the facility of $ 200 million will be executed once cleared by the Ministry of Law and Justice and after completion of codal formalities. The Federal Board of Revenue (FBR) has no objection to the proposal for granting tax exemption in respect of profit payments on foreign financing facilities.
The Finance Division has sought approval of federal cabinet of following proposals: (i) ex-post facto approval under Rule 16(1)(d) of the Rules of Business, 1973 for foreign financing facilities and ;(ii) tax exemption under clause 75 of part 1 of the second schedule to the Income Tax Ordinance, 2001 on profit payments accrued on these financing facilities.

Copyright Business Recorder, 2020

Comments

Comments are closed.