The government will likely waive off income tax on the profit earned by overseas Pakistanis from the investment they make in Pakistan’s debt market through Roshan Digital Accounts (RDAs), a national daily reported on Thursday.
According to the report, the federal cabinet has given the green light to a tax amendment ordinance that will provide tax exemption and concessions on investments through the RDAs.
The RDAs provide overseas Pakistanis with the facilities of digital banking, access to online banking, transfer of domestic funds, payment of utility bills, and payment of tuition fees in Pakistan. These accounts also enable investments in government bills, the stock exchange, and the real estate sector with the option of full repatriation.
RDAs have attracted substantial foreign exchange inflows to the country, with the value of transactions surpassing $400 million since the launch of the initiative by the State Bank of Pakistan (SBP) in September 2020. As per the SBP data, 80,000 RDAs have been opened so far.
Now there are reports that tax exemptions of 10-15 percent may be applicable on profits made from deposits in the banking system, and that some concessions might also be allowed on the investments made through the RDAs.
This will include a reduction in the tax rate from 15 percent to 10 percent on the capital gains (on the disposal) of the shares in the stock market, and this will be the final tax.
The government has also decided that the taxation on the sale and purchase of immovable properties will be set at one percent as the final tax instead of the capital gains tax.
The news report also mentioned that the tax amendment ordinance will also reduce the tax rate from 20 percent to 10 percent on profit on debt from the Naya Pakistan Certificates as final tax.
The amended law would also allow a waiver to non-resident RDA holders from filing returns for investments in shares, Naya Pakistan Certificates and immovable property. The non-residents on the active taxpayer’s list (ATL) would also be allowed to avoid higher tax rates, the report said.
The amendment would allow an exemption to Islamic Naya Pakistan Certificate Company Limited from corporate income tax, a minimum tax on turnover, and withholding taxes.