Pakistan imposes 40% tax on banks' windfall profits from forex
transactions
In a significant economic development, Pakistan has
implemented a 40% tax on windfall income profits generated by banks through
foreign exchange transactions during the years 2021 and 2022. This move,
introduced under Section 99D of the Income Tax Ordinance, 2001, was approved in
a meeting chaired by Caretaker Prime Minister Anwaar-ul-Haq.
The Federal Board of Revenue (FBR) recommended and the
cabinet approved this tax imposition, aligning with the changing economic
landscape and aiming to bolster government revenue. The recently enacted
Finance Act, 2023, introduced Section 99D, granting the government the
authority to tax windfall income profits and gains of banks.
Pakistani
banks witness record Rs163 billion profit in third quarter of 2023
It's noteworthy that banks are already subject to a higher
corporate tax rate of 39%, coupled with an additional 6% super tax.
In parallel developments, the federal cabinet greenlit
amendments to the Hajj Policy 2024. Unutilized sponsorship scheme quotas, both
from the government and private sectors, will be returned to the Saudi
Government. The policy also introduces a robust monitoring system for financial
arrangements by Hajj group organizers, ensuring compliance with Saudi laws.
Notably, the revised policy eases conditions for pilgrims above 80 years and
introduces a reduction in the hardship Hajj quota.
Moreover, the cabinet approved negotiations on Bilateral
Investment Treaties with Saudi Arabia and Qatar, following recommendations from
the Investment Board. In an effort to facilitate international business, the
cabinet expanded the business visa list to include the Democratic Republic of
Congo, Malawi, Zambia, Zimbabwe, and Kyrgyz Democrat. Additionally, names were
removed and added to the Exit Control List (ECL) based on recommendations from
the Interior Ministry.
Proposed
tax on forex exchange income to reduce banks’ profits up to 11%
To enhance environmental practices, the cabinet gave the
green light to the signing of the Hong Kong International Convention 2009 for
the safe and environmentally sound recycling of ships. This convention will
pave the way for legislation on ship recycling in Pakistan, emphasizing safety,
training, and proper disposal of hazardous wastes.
Lastly, the cabinet granted an exemption to the Trading
Corporation of Pakistan from specific regulatory rules for procuring 200,000
metric tons of urea from the international market. This strategic move aims to
address agricultural needs in the country.
Source: https://pkrevenue.com/