EUR 40.66 For Business Accounts Only

Pakistan Budget FY19 Preview

Please find attached our detailed research presentation on Pakistan Budget FY19 Preview

 

• The recent Tax Reforms Package where the salaried class was given significant relief has set the tone of expectations of further relief in upcoming budget. Beside tax relief ahead of elections, economic growth, improvement in investment climate and populous measures are likely to remain key areas of focus for the Govt.
• However, we believe that tax and other populist measures could potentially be reversed or revised after general elections as the new Govt. will want to set realistic targets amid external account concerns. Moreover, we expect Pakistan to get into another IMF program in 2H2018, which is usually followed by shrinkage in fiscal balance.
• We expect the govt. to rationalize the Capital Gains Tax (CGT) on sale of shares for tax filers along with specific holding period.
• The Govt. may also withdraw the 5% tax on market price of bonus shares in Federal Budget FY19.
• We expect corporate tax rate of 30% to be maintained in this year’s budget. We expect the Govt. to continue with 3% of super tax (4% for banks) in this budget as well.
• Real estate measures announced in the recently announced Tax Reforms Package are expected to be part of Finance Bill. This will help bring unaccounted for wealth in the economy that will have positive implications to other sectors including stock market.
• Sector wise Consumer, Chemical, Pharmaceutical and Fertilizer may be the beneficiaries of the budgetary measures.
• Going forward, local politics (Former Prime Minister Nawaz Sharif’s court cases), smooth transition of democratic govt., success of recently announced amnesty scheme, and external account situation will likely set the tone of Pakistan equities.