Lahore: The federal cabinet has provided its approval to the proposed waiver for various types of income taxes on the first-ever Chinese currency-denominated bonds and Eurobonds in an effort to attract foreign investors, a news source reported on January 20.
Going forward, investors will not be required to pay up to 30 percent of income tax along with other taxes on the said bonds. Earlier, the Ministry of Finance had suggested the government to abolish taxes on both Panda and Eurobonds.
The Ministry of Finance is in the process of floating three types of sovereign instruments – Eurobonds, Sukuk (Islamic bonds) and Panda bonds – to acquire debt. The ministry intends to raise USD 2 billion from global markets, including approximately USD 250 to USD 300 million from Chinese capital markets through Panda bonds. It will be the first capital market transaction involving Pakistan in China. The prices for the debt are expected to be around 5.5% to 6.5% depending on instruments and maturity. It is pertinent to mention that the Federal Board of Revenue (FBR) has also provided its approval to the exemption.
