ISLAMABAD: The Federal Board of Revenue (FBR) has suggested Shariah-compliant criteria for companies whose shares are traded on a stock exchange to avail the reduced rate of tax under Income Tax Ordinance 2001.
According to the SRO.1173(I)/2016 issued by the FBR, the Board has proposed amendments to the Income Tax Rules, 2002. To avail reduced rate of tax, the FBR has proposed Shariah-compliant criteria for a company whose shares are traded on a stock exchange.
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Firstly, the business of the company should be Halal ie it shall not include processing or manufacturing of pork, liquor, non-Halal products, pornographic material or any other activity not permitted by Shariah. Secondly, there should be Riba-free (interest-free) financing on the balance sheet of the company; however, the company may be leveraged through Islamic modes of financing obtained from licensed Islamic financial institutions.
Thirdly, all the investments made by the company should be one hundred per cent Shariah compliant; therefore, it would not be permissible for the company to acquire non-Shariah compliant instruments/securities which yield interest or income that is not Halal.
Fourthly, the company would be obliged to maintain free float of the company at 30 percent of the outstanding shares.
