The Securities and Exchange Commission of Pakistan has completed the spadework on the budget proposal for imposition of capital gains tax (CGT) on stock exchanges with the aim to generate maximum revenue.
Speaking on the occasion of a signing ceremony between the SECP and MCB Bank on payment collection services on Thursday, Raziur Rahman Khan said the commission has studied different international models where CGT is applicable.
In this connection, the SECP and FBR are conducting meetings to discuss the levy particularly two issues - what should be the holding period of securities and what should be the base price of shares, Razi said. The international models have revealed that CGT on stock market should exempt investment in listed securities for more than 12 months.
Responding to a query, he said that best international tax administrations have levied CGT on holding period. A study being conducted by the commission confirmed that such type of levy is applicable in different countries. The concept of CGT on the basis of investment period could be applied in Pakistan.
However, the CGT levy might exempt investment in listed securities for more than 12 months. The SECP has asked the FBR to levy CGT on capital market, but securities should be exempted from levy where investment is kept for 12 months or more.
Razi said that the government hasn't yet passed the proposed stock exchanges (corporatisation, demutualisation and integration) law. Earlier, the SECP inked an agreement with MCB Bank for payment collection services. Under the agreement, 500 branches of MCB will accept payments to be made by public and corporate entities to SECP.
Rashid I Malik, Commissioner SECP signed the agreement on behalf of SECP while Muhtashim Ashai, Senior Vice President/Group Head Wholesale Banking of MCB inked the agreement on behalf of his bank.
Under the agreement, general public and corporate entities will no longer have to obtain bank payment challan forms from the bank or other sources. These will be available on the website of SECP www.secp.gov.pk and can be printed from one's desktop. Payment against these forms can be deposited in any of the 500 MCB branches (list will be available on SECP website). The commission will shortly introduce more banks, which will be providing this service.
This agreement is part of SECP initiative to facilitate its stakeholders. It is also an important component of the e-services project to be launched shortly. Rashid I Malik, Commissioner SECP said that the SECP has selected MCB Bank due to is large network to facilitate payments of public and corporate entities.
He added that SECP has eight regional companies across the country and the public and corporate entities were facing problems in submitting their payments through these companies. The companies have been allowed to file the requisite form electronically by making payment through the bank.
The ceremony was also attended by SECP Commissioner Salman Sheikh; SECP Commissioner Tariq Hussain; SECP executive directors Javed Siddiqui and Nazir Shaheen; Aali Shafi Executive Vice President and Divisional head cash management of the MCB, Naeem Saigol Vice President/National Sales Head of the Bank, Sobia Iftikhar and Mariam Pervaiz and Head of Internal and External Affairs of the Commission Imran Ghaznavi.