Hifsa Raja

The Senate Standing Committee on Finance and Revenue has emphasized the importance of online trading, ease of doing business, and simplifying regulations to create a more business-friendly environment for foreign investors. Pakistan's capital market has recommended tax exemptions on the income derived from foreign investments as part of proposals for the upcoming 2023-2024 budget submitted by the Pakistan Stock Exchange (PSX) to the finance ministry.

Pakistan's complex regulatory environment, with numerous regulations for investors to comply with, hinders investment. Therefore, simplifying regulations is essential to attract more foreign investment. To attract foreign investment and support the depleting foreign exchange reserves, the government recently announced tax exemptions on profit and capital gains from investments in government debt securities by non-resident banking companies, including treasury bills and Pakistan Investment Bonds (PIBs).

The PSX proposed to exempt the income derived from foreign investment to encourage foreign investors into the capital market. The rationale for the proposal is that it will help inject foreign inflows into the foreign exchange reserves of the country and restore local investors' confidence in the market, which will eventually yield a positive impact in terms of tax revenue.

In a recent interview with WealthPK, Jahanzeb Mirza, CEO of S.D Mirza Securities, a prominent financial services firm in Pakistan, appreciated the Senate standing committee’s recommendation to simplify regulations and a proposal by the Pakistan Stock Exchange (PSX) to draw foreign investors to the capital markets.

Mirza emphasized the significance of creating a more favourable investment climate by simplifying regulations and offering tax exemptions to garner foreign investment. Such measures, he said, would not only benefit the struggling economy of Pakistan but also help restore a positive perception of the market among local investors.

Regaining investors' confidence in the market ultimately leads to an increase in taxable activities and tax revenue. Moreover, Mirza noted that the recent tax exemptions on profit and capital gains from investments in government debt securities by non-resident banking companies would support the country's depleting foreign exchange reserves. As an influential figure in the financial sector, Mirza's appreciation of these initiatives highlights the importance of reassuring foreign investment to Pakistan's capital markets and promoting a more favourable investment climate.

Credit: Independent News Pakistan-WealthPk