ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) has asked the Federal Board of Revenue (FBR) to extend critical relief towards the capital markets and corporate sector in the upcoming budget.

The regulatory body asked the FBR to address anomaly created in the definition of ‘security’ for computation of Capital Gains Tax (CGT) on listed securities.

The SECP said that in order to unlock the potential of private funds, proposals to allow perpetual pass through status to all categories of private funds have been proposed.

Considering the stock market condition, the reduction of CGT should be looked into for two years on disposal of listed securities, and it would be beneficial for investors if distinction between short-term gains and long-term gains is also restored, the regulator said.

To revamp regulatory regime and introduce Private Funds Regulations, 2015, the SECP recommended changes to the income tax laws. In addition, the proposal to promote documented real estate investment trust (REIT) structures is aimed at addressing short-term and inadequate tax incentives for the real estate sector through REITs.

These include allowing perpetual pass through status covering all categories of REITs, granting exemption from capital gains, taxation of dividends from REITs and advance tax on transfer of property.

Moreover, the SECP pointed out that the reduced cost of doing business in the insurance sector is essential for increasing growth and penetration as it enables risk mitigation and addresses financial fragility issues.

Published in Dawn, May 10th, 2020