February 24, 2023 (MLN): In an effort to attract more foreign investment in Pakistan's banking sector, the Federal Board of Revenue (FBR) has exempted income tax on profit on debt and capital gains from debt and debt instruments approved by the federal government for approved non-resident banking companies.
The FBR's notification introduces a new sub-rule (4) in Rule 8 of the Seventh Schedule to the Income Tax Ordinance, 2001 (XLIX of 2001). The sub-rule specifies that non-resident banking companies approved by the federal government will not be liable for tax chargeable under this Ordinance on the profit earned from debt and capital gains from debt and debt instruments approved by the federal government.
The amendment comes in the exercise of the powers conferred by rule 10 of the Seventh Schedule to the Income Tax Ordinance, 2001 (XLIX of 2001). The Federal Government aims to attract more foreign investment in the country's banking sector by offering tax exemptions to non-resident banking companies.
The move is expected to encourage more foreign investment in the country's banking industry, which will ultimately help boost economic growth and create employment opportunities for the citizens of the country.
