Regulator eases tax rules to boost stock market

Karachi: Pakistan decided to ease rules on capital gains tax to revive trading volumes hit by the imposition of the levy.

"We agree on proposal of the stock exchange to support activity and positive growth," Finance Minister Abdul Hafeez Shaikh said during a visit to the Karachi Stock Exchange yesterday. The decision applies from April 1.

The Karachi Stock Exchange suggested that the existing two tax bands be cut to a single flat rate, and that the levy be paid after it is calculated and certified by the National Clearing Company of Pakistan Ltd.

Pakistan introduced a tax on capital gains on share purchases from July 1, 2010.

It requires investors to pay a 10 per cent levy if stocks are held for less than six months and 7.5 per cent if held for six to 12 months.

Average daily volume slumped to 60 million shares last year from 108 million in 2010 and 169.14 million in 2009, data compiled by Bloomberg show.