AAJ TV : Pakistan Ki Awaz

KARACHI : The government has agreed to extend exemption of Capital Gain Tax (CGT) on listed shares to further two years to June 30, 2010 from June 30, 2008. This was decided at a meeting of a Karachi Stock Exchange delegation and Finance Minister Naveed Qamar at Islamabad on Tuesday. The meeting was also attended by the members of the newly-formed Economic Advisory Council.

The government side also agreed that there would be no change in the Capital Value Tax (CVT) as it would continue to remain at the present level. Government controlled corporations, companies and entities such as EOBI, State Life Insurance Corporation, Port Authorities, OGDCL, PIA, Pakistan Steel Mills Corporation will be asked by the government to invest up to 25 percent of their retirement and long term funds in the equity market in a phased manner.

It was also decided that the Current Tax Regime for Capital Markets to remain unchanged for the Budget 2008-09, the demutualization of the stock exchanges to be implemented this year through Finance Bill 2008-09 and incentives for the new listings to be included in the Finance Bill.

A committee comprising representatives of capital market and government has been tasked to develop a three-year Capital Markets Policy over the next three months. The Capital Market Policy will focus on reforms related to taxation, promotion of new listings, integration of capital markets with country's economy and other measures to ensure a sustainable and healthy capital market on a long-term basis.

At the meeting, all stake-holders reportedly recognised the key role capital markets can play in attracting investment, boosting confidence, accelerating economic growth rate and increasing employment opportunities.

In their reaction, stock brokers, retail investors and market participants expressed satisfaction over the government decision regarding the extension in exemption of CGT and said that it is expected that market activity would get a boost as a result of this decision.

The possible imposition of CGT on listed shares had been the major concern of market participants. This concern led to cause a negative sentiment on the market in the last two weeks. The market participants were optimistic about the prospects of healthy trading on available attractive levels and an increase in trading volume following Tuesday's decisions.

Copyright Business Recorder, 2008