Tax Exemptions to be approved on OGDC’s exchangeable Bonds

Karachi: The Federal Cabinet is all set to approve tax exemptions for investors of the OGDC’s exchangeable bonds of worth USD 750 mn approved by the Financial Advisory Consortium (FAC) led by Citibank, JP Morgan, Credit Suisse and their legal counsel.

According to Alfalah Securities Limited, investors of the OGDC’s Exchangeable bonds would be subjected to a withholding tax on the dividend income of shares acquired after the conversion of exchangeable bonds, capital gain tax to be applicable on sale of shares acquired after conversion of the exchangeable bonds while on the other hand, the investors would be given tax exemptions on the interest income derived from these bonds, tax exemptions on capital gains rising due to trading of bonds from where the bonds are internationally listed and also on gain or income derived from settlement of the bond either in the form of shares or cash in lieu of shares.

The tax exemption would be done to attract investors’ interest in the bond however; the current global recessionary fears would make it difficult for the government to raise funds from the foreign investors.

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