The Pakistan Stock Exchange Limited (PSX) has advised the government to take significant steps to digitise Pakistan’s payment system and document the country’s cash-based economy, which accounts for 35 to 50 percent of GDP.
The Pakistan Stock Exchange (PSX) has submitted budget suggestions to the Federal Board of Revenue (FBR) and the Ministry of Finance for the upcoming fiscal year.
In the modern world, digitisation of the payment system is a must to support the documentation drive. The cash-based economy’s contribution to GDP is estimated to be between 35 and 50 percent. Today’s technology makes it possible to digitise a sizable fraction of these cash transactions, enabling accurate evaluation of the whole economic activity pool.
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Therefore, PSX advised that the government create a strategy for fully digitising the payment system and offer incentives to the business sector to quickly embrace it.
Companies in Pakistan have enormous potential to raise funds from the capital market due to substantial structural developments in the capital market. As a result, the economy will be better documented, and tax income will rise. Additionally, this will support the development of the capital markets, present lucrative investment opportunities, and thus raise Pakistan’s savings and investment rates.
Listed businesses join the formally recognised, regulated, and documented corporate sector. Consequently, PSX works hard to promote listings.
To encourage companies to list, it is suggested that their tax status be grandfathered at the time of listing application, meaning that no new cases for past tax returns should be opened, with the exception of any pending cases where proceedings have already been started under the Ordinance before the date of listing application and will continue in accordance with the law.
It is common knowledge that a sizable portion of Pakistan’s economy is unregistered and that a sizable proportion of businesses operate in the unregistered sector. This will encourage these businesses, especially SMEs, to register with the government and begin paying taxes without worrying that their previous tax returns—or absence thereof—would be called into question.
They will have documentation going ahead and pay the full tax amount. Consequently, it added, this will be a big revenue-positive action.
