The government has waived income tax on profit earned by overseas Pakistanis from the investment they make in the country’s debt market through the Roshan Digital Accounts.
Officials privy to the development say that the federal cabinet has given the green light to a tax amendment ordinance that would provide tax exemption and concessions on investments through RDAs.
Sources say that the ordinance will be promulgated in the coming days after being signed by President Arif Alvi.
Using their RDAs, non-resident Pakistanis can avail digital banking facilities, including access to online banking, domestic funds transfer, utility bills and tuition fee payment in Pakistan, as well as investments in government bills, stock exchange, and real estate sector with the option of full repatriation.
The country’s foreign exchange inflows through RDAs have already shot past $400 million since the launch of the initiative in September of last year.
So far, the total number of accounts opened for RDAs has hit 80,000, according to the SBP. Tax exemptions of 10% to 15% apply to profit made from deposits in the banking system.
Officials have also revealed that the government has approved concessions to the investment made through RDAs. This will include a reduction in tax rate from 15% to 10% on capital gain on the disposal of shares in the stock market, which will be the final tax.
The government has also decided that the taxation on sale and purchase of immovable property will be set at 1% as the final tax instead of the capital gain tax.
The tax amendment ordinance will also reduce the tax rate from 20% to 10% on profit on debt from Naya Pakistan Certificates as final tax.
The amended law would allow waiver from the filing of returns to non-resident RDA holders and resultant investors in shares, Naya Pakistan Certificates and immovable property.
The non-residents would be allowed on ATL to avoid higher tax rates. 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.
