PSBA sounds alarm over tax law amendment blocking non-filers from trading

KARACHI: The Pakistan Stock Brokers Association (PSBA) has expressed serious concerns over the recently introduced Tax Law (Amendment) Act, 2024 that bars non-filers from opening accounts in the stock exchange.

This development has prompted the PSBA to call for an urgent dialogue with government officials to address the potential repercussions for the financial market and investor base. In a formal letter addressed to Finance Minister Muhammad Aurangzeb last week, CEO and Secretary of the PSBA Bilal Farooq Zardi highlighted the essential need for timely consultation with stakeholders in light of the new amendment.

Zardi commended the government’s initiative aimed at documenting the economy and bolstering compliance mechanisms. However, he cautioned that such measures, conducted without stakeholder engagement, could adversely affect stock market dynamics and the broader investing community.

The contentious amendment stipulates that “any person authorised to sell securities, including debt securities or units of mutual funds, shall not sell, open an account or clear the sale of securities or mutual funds to an ineligible individual or association of persons.” This new rule directly impacts non-filers, many of whom represent a significant portion of the active trading population within the stock market.

In his letter, Zardi urged the finance minister to arrange a meeting with the PSBA at the earliest. He mentioned the importance of discussing the implications of this amendment and brainstorming achievable solutions that would both maintain the integrity of the market and fulfil the intended policy objectives of the government.

Market analysts are echoing the PSBA’s concerns, noting that a substantial segment of investors in the stock market are non-filers. This reality underscores the potential risks of alienating these participants, which could lead to decreased market activity and liquidity.

As the situation develops, the PSBA remains vigilant and committed to representing the interests of its members and the larger investment community, advocating for a balanced approach that harmonises regulatory compliance with market accessibility.