November, 30, 2023
Caretaker Government Imposes 40% Tax on Banks

Caretaker Government Imposes 40% Tax on Banks

Infostani Sources- The caretaker government has imposed a one-time 40 percent tax on bank profits derived from foreign exchange transactions in the past two years. A measure that the previous coalition administration also considered but failed to implement. The federal cabinet approved the windfall tax following strong criticism directed at banks, for generating a significant profit of Rs110 billion in 2021 and 2022 from speculative rupee-dollar trade. The decision defied analysts’ expectations, as most had considered the imposition of the tax less likely.

Caretaker Prime Minister Anwaarul Haq Kakar chaired the cabinet’s meeting, which also approved amendments to the Haj Policy 2024. The Saudi government will reclaim the unutilized quota from government and private sponsorship schemes under these changes. The cabinet, according to the Prime Minister’s Office (PMO), approved a proposal from the Federal Board of Revenue (FBR). The FBR proposed the imposition of tax on windfall profits of banks through the Finance Act, of 2023, introducing Section 99D to the Income Tax Ordinance 2021.

The caretaker government remained firm on taxing the income banks generate from speculative exchange business, anticipating revenue of over Rs40bn. This tax imposition is seen as a gesture to satisfy the International Monetary Fund (IMF) and demonstrate the caretaker government’s commitment to enhancing tax collection. The decision is likely to face strong resistance from the banks, prompting the government to engage in negotiations to minimize the tax percentage.

Cabinet Approves Amendments to New Haj Policy, Introduces Monitoring System, and Relaxes Conditions

Caretaker Government Imposes 40% Tax on Banks

Haj policy- The federal cabinet, under the new Haj policy, has also decided to implement a foolproof monitoring system for the financial arrangements of Haj group organizers and to permit children below 10 to perform the religious obligation. The authorities will relax conditions for pilgrims aged above 80 to keep a helper.

Additionally, Haj group organizers will enter into agreements with the pilgrims regarding the enlistment of local supporters during their stay in Saudi Arabia. This condition will be included in the service provision agreement, and its violation will result in fines and blacklisting.

The cabinet has also approved a reduction in the hardship Haj quota. The cabinet has approved amendments to the new Haj policy, assigning fifty percent of the quotas for hiring local supporters to Pakistani students studying in different universities in Saudi Arabia. These students will serve as welfare staff, in line with the recommendations of a committee formed in the previous meeting

Caretaker Government Approvals: New Haj Policy, Bilateral Investment Treaties, Trade Policy Flexibility, Visa List Updates, and International Convention on Ship Recycling

Other approvals- The federal cabinet, under the new Haj policy, also decided to implement foolproof monitoring. Additionally, the cabinet approved negotiations for bilateral investment treaties with Saudi Arabia and Qatar based on the Board of Investment’s recommendation. Upon the Ministry of Commerce’s proposal, the cabinet granted approval for the constitution of a committee to hear appeals against trade organization regulators’ orders. It also allowed exemption and flexibility in the provisions of Import Policy Order 2022 and Export Policy Order 2022.

Upon the recommendation of the Interior Ministry, the cabinet approved the inclusion of the Democratic Republic of Congo, Malawi, Zambia, Zimbabwe, and Kyrgyz Democrat in the business visa list. Furthermore, it authorized the removal of 18 persons’ names from the Exit Control List (ECL) and the inclusion of nine other names in the list on the advice of the Interior Ministry. On the suggestion of the Ministry of Kashmir Affairs and Gilgit Baltistan, the cabinet approved the Jammu and Kashmir State Property Budget for the fiscal year 2023-24, earmarked at Rs 267.59 million for the current year.

The meeting gave approval for the signing of the Hong Kong International Convention 2009 for the safe and environmentally sound recycling of ships. It also endorsed the preparation of a draft Instrument of Accession in that regard, as suggested by the Ministry of Maritime Affairs. Under the convention, Pakistan would legislate over recycling ships and enhance the capacity of relevant staff through training.

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