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Pakistan stocks have been rallying since Finance Minister Asad Umar presented what he called a “mini-budget” — officially called the Finance Supplementary Bill of 2019. The bill aims to improve the business environment in the South Asian nation, and investors applauded the measures. However, analysts from one firm note that more information on Pakistan’s financial standing is still needed.
Pakistan targets businesses
Credit Suisse analysts Fahd Niaz and Farhan Rizvi outlined and analyzed the details about the Finance Supplementary Bill, which is now up for debate in the Pakistan Senate. The bill proposes to offer tax relief to important sectors while offering incentives for the capital markets in Pakistan. It also tweaks the taxation regimes, although it doesn’t improve any new direct taxes.
However, the big problem the Credit Suisse team sees is that it doesn’t address the continuing shortfall in tax revenue or address Pakistan’s national deficit.
Boosting profitability in most sectors
The Finance Supplementary Bill of 2019 proposes to abolish the Super Tax for non-banks starting in July. The tax is currently set at 3%, and it’s scheduled to be phased out in three years if the new bill doesn’t pass. Banks will still pay the 4% Super Tax levied on them until about 2021, and instead of the tax falling 100 basis points annually until then, it will be kept the same.
The bill also proposes to remove the 5% tax on undistributed reserves for companies with payout rations that are less than 20%. The CS team notes that this provision had previously forced some companies to life payouts in an attempt to avoid having to pay the tax. The Pakistani government also plans to offer relief on the inter-corporate dividend.
The Finance Supplementary Bill could also incentivize investments in Special Economic Zones in Pakistan. Officials plan to remove customs duties and

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