• Tax to be imposed under Finance Act, to help generate over Rs40bn
• Cabinet also approves changes to Haj policy
• Allows removal of 18, adding of nine names to ECL
ISLAMABAD: The caretaker government imposed a one-off 40 per cent tax on bank profits reaped from foreign exchange transactions in the past two years, a measure the previous coalition administration also considered but failed to implement.
The federal cabinet’s approval of the windfall tax came after strong criticism of banks that they had earned a hefty Rs110 billion in profits in 2021 and 2022 from the speculative rupee-dollar trade. The decision was not in line with analysts’ expectations as most considered the tax imposition less likely.
The cabinet’s meeting, chaired by Caretaker Prime Minister Anwaarul Haq Kakar, also approved amendments to the Haj Policy 2024, under which the unutilised quota of government and private sponsorship schemes would be returned to the Saudi government.
According to the Prime Minister’s Office (PMO), the cabinet approved a proposal of the Federal Board of Revenue (FBR), which said the Finance Act, 2023, introduced Section 99D to the Income Tax Ordinance 2021 to enforce the imposition of tax on windfall profits of banks.
The caretaker government was also adamant about taxing the banks’ income earned from the speculative exchange business. The tax will help the government generate over Rs40bn.
It is also believed that the government has imposed this tax to appease the International Monetary Fund (IMF) and show the lender that it was serious about boosting tax collection.
The banks are expected to resist the decision strongly, compelling the government to renegotiate the tax percentage as low as possible.
Haj policy
Under the new Haj policy, the federal cabinet also decided to enforce a foolproof monitoring system for the financial arrangements of Haj group organisers and allow children below 10 to perform the religious obligation. For the pilgrims aged above 80, conditions for keeping a helper would be relaxed.
Besides, Haj group organisers would enter into agreements with the pilgrims in that regard, enabling them to enlist the services of local supporters during their stay in Saudi Arabia.
The condition would be inserted in the agreement for the provision of services, and its violation would lead to fines and blacklisting.
The cabinet also sanctioned a reduction in the hardship Haj quota. A total of 50pc quotas of hiring local supporters would be dedicated to those Pakistani students studying in different universities in Saudi Arabia and their deployment would be made as welfare staff.
The cabinet approved the amendments to the new Haj policy per the recommendations of a committee formed in the previous meeting.
Other approvals
The cabinet also approved negotiations on bilateral investment treaties with Saudi Arabia and Qatar on the recommendation of the Board of Investment.
Upon the Ministry of Commerce’s proposal, the cabinet sanctioned a committee’s constitution about hearing appeals against trade organisation regulators’ orders, exemption and flexibility in the provisions of Import Policy Order 2022 and Export Policy Order 2022.
The cabinet, upon the recommendation of the Interior Ministry, also approved the inclusion of the Democratic Republic of Congo, Malawi, Zambia, Zimbabwe and Kyrgyz Democrat in the business visa list.
It also allowed the removal of the names of 18 persons from the Exit Control List (ECL) and the placing of nine other names in the list on the advice of the interior ministry.
On the recommendation of the Ministry of Kashmir Affairs and Gilgit Baltistan, it approved the Jammu and Kashmir State Property Budget for the fiscal year 2023-24. For the current year, its budget is earmarked at Rs 267.59 million.
The meeting approved the signing of the Hong Kong International Convention 2009 for the safe and environmentally sound recycling of ships and the preparation of a draft Instrument of Accession in that regard on the suggestion of the Ministry of Maritime Affairs.
Under the convention, Pakistan would legislate over recycling ships and training would be imparted to the relevant staff, besides enhancing their capacity.
Published in Dawn, November 16th, 2023
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