Karachi November 14 2024: About a dozen banks in Pakistan have secured a temporary relief from the Islamabad High Court against a government tax on the lenders if their borrowing to the private sector was lower than the target, according to Pakistan Banks’ Association.
In separate cases, the court barred the government to collect tax based on advance-to-deposit ratio of banks until it gives a final verdict on the petitions by different banks, Muneer Kamal, Chief Executive Officer at the Karachi-based body representing the nation’s banks, said on phone. The court will hear the case from Dec. 3 and it is not known when the final order will be given.
“Till the next date of hearing no coercive action will be taken against the petitioner on the basis of any calculation made by the tax department,” according to an order by judge Babar Sattar on Nov. 13 on an application by Meezan Bank Ltd.
The authorities had imposed the tax if the loans by banks to private sector did not exceed 50% of their deposits. The measure comes as the South Asian nation wants to boost its revenue as part of the $7 billion loan program with the International Monetary Fund.
MCB Bank Ltd., Askari Bank Ltd., the Pakistani unit of Citigroup Inc, Standard Chartered Bank Pakistan Ltd. and Habib Metropolitan Bank Ltd. are among other lenders to get the same relief in separate orders, Kamal said.
The banking sector is already highly taxed, Kamal said. It’s contribution to national taxes has increased almost four times to 618 billion rupees in 2023 compared with two years ago, he said.
