Pakistan cuts tax for foreigners investing in bonds

ISLAMABAD—Pakistan has cut the tax it charges on profit payments by foreigners investing in its debt instruments, caretaker Finance Minister Salman Shah said on Monday.
“We have reduced the tax charged on foreigners from 30 percent to 10 percent to provide them a level playing field with local investors,” he told. Local investors are charged 10 percent on such payments. “The revision will be effective immediately,” Shah said. Bankers and analysts said the reduction would make Pakistan Investment Bonds (PIBs) and Treasury bills more attractive for foreign investors.
“The PIBs and T-bills could become an attractive investment option for foreign investors, especially as the US Fed is cutting rates and the State Bank of Pakistan is committed to a tighter monetary stance,” said a foreign banker. “This will also help the government in securing foreign exchange to shore up forex reserves, and using the rupee equivalent to finance the fiscal deficit,” he said.
Pakistan’s foreign exchange reserves were recorded at $14.063 billion in the week that ended on March 1, down 14.7 percent from an all-time high of $16.486 billion on Oct 31, 2007.—APP