The federal cabinet on Wednesday approved, on the advice of the Federal Board of Revenue (FBR), a 40 percent tax on windfall profit earned by banks on foreign exchange transactions during the years 2021 and 2022.
The windfall tax has been under consideration for the past year, motivated by the Rs. 110 billion in profits banks earned in 2021 and 2022 from the speculative rupee-dollar trade. According to a statement issued by the Prime Minister’s Office, the cabinet approved a FBR proposal to avail Section 99D of the Income Tax Ordinance 2021—introduced in the Finance Act, 2023—enforcing the imposition of tax on windfall profits of banks.
Reportedly, this tax would be collected in December and would total roughly Rs. 40 billion. The announcement came ahead of the International Monetary Fund (IMF) confirming it had reached a staff-level agreement with Pakistan on the first review of the ongoing $3 billion Standby Arrangement. In a statement, the global lender said authorities were “building capacity to expand the tax base and raise revenue mobilization.”
The federal cabinet also approved amendments to the Haj Policy 2024, returning to the Saudi government the unutilized quota of government and private sponsorship schemes; enforcing a foolproof monitoring system for financial arrangements of Haj group organizers; allowing children below 10 to perform Haj; and relaxing conditions of a helper for pilgrims over 80, including enlisting the services of locals during their stay in Saudi Arabia.
Additionally, the cabinet approved a reduction in the hardship Haj quota, and decided to allocate 50 percent quota of hiring local supporters for Pakistani students studying in Saudi Arabia.
The cabinet meeting also approved negotiations on bilateral investment treaties with Saudi Arabia and Qatar on the recommendation of the Board of Investment. It similarly approved the formation of a committee to hear appeals against trade organization regulators’ orders, exemption and flexibility in the provisions of Import Policy Order 2022 and Export Policy Order 2022.
On the recommendation of the Interior Ministry, the cabinet 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 18 persons from the Exit Control List and placing of nine new persons in the list.
Taking up a proposal of the Ministry of Kashmir Affairs and Gilgit-Baltistan, the interim cabinet approved the Jammu and Kashmir State Property Budget for fiscal year 2023-24. It also backed 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.