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Tax amnesty scheme to stimulate foreign inflows
By Tariq Butt April 07, 2018
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ISLAMABAD: The tax amnesty scheme, unveiled by Prime Minister Shahid Khakan Abbasi on Thursday, is expected to augur well with the stocks market, which has been rallying for the last one week ahead of its announcement, as it might stimulate foreign inflows into the capital market.

“The scheme will be reflective of the government’s efforts to address the external account woes, which will resultantly attract foreign flows into the country,” Faizan Kamran, an analyst at Arif Habib Limited said in a report.

Pakistan Stock Exchange’s benchmark KSE-100 shares index gained 3.45 percent in the last seven consecutive days ahead of the tax amnesty scheme to authorise Pakistanis to pay a flat two to five percent tax to bring their foreign assets back to the country.

The scheme’s beneficiaries will also get immunity from different other laws, including National Accountability Ordinance 1999, Income Tax Ordinance 2001, Companies Act 2017, Foreign Exchange Regulations Act 1947, Prohibition of Benami Transactions Act 2017 and Federal Investigation Agency Act 1974.

Arif Habib, Chairman of Arif Habib Group, said the economic fundamentals are improving and corporate sector is growing. “Only the current account deficit is a cause of worry and that too could be addressed through the amnesty scheme and increased exports.” “The market would welcome the tax amnesty scheme.”

Around $93.5 million flew from the capital market on account of portfolio investment in equity securities during the first eight months of the current fiscal year of 2018, although it was down from $351.9 million in the same period a year earlier, according to the central bank.

Kamran said chances of success of the amnesty scheme as opposed to previous ones are higher as globally regulations pertaining to ‘anti-money laundering’ and ‘know your customer’ have become much more stringent and list of immunity from different ordinances is larger in the scheme. “Previously immunity was only restricted to a few ordinances.”

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