Pakistan Banks Association Seeks Lower Tax Rate for Banking Sector:
The Pakistan Banks Association (PBA) has submitted its federal budget proposals for the fiscal year 2023-24 (FY24), calling for a reduction in the tax rate for banks. The PBA has urged the Federal Board of Revenue (FBR) to decrease the tax rate from the current 39 percent to 29 percent, aligning it with the tax rate for the corporate sector.
PBA Highlights Disparity in Tax Rates and Recommends Changes:
The PBA emphasizes the disparity in tax rates between bank deposits and investments and proposes a 15 percent tax rate on earnings on debt. It argues that the tax rate should not be a determining factor for cash placements in banks or investments in mutual funds or stocks. The association believes that rectifying this issue is crucial for the growth and stability of the banking industry.
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PBA Supports FBR and Offers Assistance for Tax Base Expansion:
While recognizing the budgetary constraints faced by the government, the PBA reaffirms its commitment to supporting the FBR in its efforts to increase the tax base. The association acknowledges the importance of a balanced and sustainable tax policy and expresses its willingness to collaborate with the government in achieving economic development and financial stability.
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The PBA also puts forward additional recommendations, including KIBOR-based payouts for banks and regulatory amendments to classify Shariah-compliant transactions as financing activities. These proposals aim to provide clarity, promote fairness, and ensure a conducive environment for the banking sector to thrive.