KARACHI: Pakistan Stock Exchange (PSX) has urged Federal Board of Revenue (FBR) that its services should be brought under normal regime from next tax year.
PSX in its budget proposals for fiscal year 2017-18 recommended that the services provided or rendered by the stock exchange should be taxed under the normal tax regime.
Alternatively, the similar facility of reduced rate of two percent minimum tax on the gross amount of turnover from all the sources should be extended to the PSX as well.
Giving rationale, the PSX said that the effective rate of tax on the pretax profits of the capital market had increased manifold. Further the receipts on account of services rendered or provided by the PSX were not at par with the other service providers.
The stock market said that under the Finance Act, 2015 the tax deductible at the rate of 8 percent was made minimum tax for providing or rendering services by all the service sector companies.
The minimum tax treatment has severely affected the profitability of PSX, as it is paying higher tax as compared to what it would pay otherwise if it was required to pay tax on profit basis at applicable corporate tax rate.
However, after negotiation a reduced rate of minimum tax at two percent of the gross amount of turnover from all sources was introduced on freight forwarding services, air cargo services, courier services, manpower outstanding services, hotel services, security guard services, software development services, IT services and IT services tracking services, advertising services other than by print or electronic media, share registrar services, engineering services or car rental services.
