Pakistan rupee to plunge further

It's been a bad week for Pakistan's already weak equity market. Not only was it confirmed that investors in the benchmark KSE-100 index will soon be subject to a Capital Gains Tax, but the Finance Minister resigned shortly after. To date no replacement has been announced. Expectedly, the market plunged.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aEFZY.RCINfE

Capital Gains Tax; Pakistan set to remove exemption

Pakistan's Dawn newsapaper reports that a capital gains tax on stock trading from July 1 2010 will be imposed at a rate of 10pc for holdings of less than 6 months and at 7.5pc for holdings of 6 - 12 months. Stock markets have been exempt from CGT since 1974 but growing pressure on the fiscal deficit (approx. 5.2% of GDP in the current year) and IMF recommendations compelled the Pakistan government to reconsider this as a budgetary measure for FY11 which commences on 01 July 2010. This is likely to have a perceptibly negative impact on Pakistani stock markets. Volumes in the benchmark KSE-100 index have dipped substantially since 2008, in the wake of trading restrictions as local regulators responded (badly) to the onset of the global financial crisis at the time.

http://www.dawn.com/wps/wcm/connect/dawn-content-library/dawn/the-newspaper/front-page/13+capital-gains-tax-on-stock-trading-from-july-1-320-za-02