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FBR considers raising tax rate for banks – Alfalah Securities Limited

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by January 17, 2012 Brokerage

Karachi: FBR is considering increasing tax rate for banks to 40% instead of 35% to increase revenue collection in the upcoming Federal Budget FY13.

According to Alfalah Securities Limited, the banks have gradually shifted more towards investment in government securities rather than earning through advances thus, enabling them to earn high return from a risk free investment. The contribution of returns from investment in government securities have jumped to 30% in June 2011 of the interest income from 24% a year ago. The higher tax rates would be negative for the banking sector’s profitability however there are chances of maintaining the current rate intact in the budget therefore; it would have a neutral impact on the banking industry.

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