Banking sector likely to face higher taxes

The government is likely to resort to heavy taxation on the banking sector in the 2023-24 budget as Islamabad looks for easy sources of revenue in a fiscally challenged environment. “We believe the 2023-24 budget will likely carry more negative earnings implications for banks,” said Amreen Soorani, head of research at JS Global. There’s a likelihood of super tax increasing from the current level of four per cent for the banking sector to 10pc, which will lead to an earnings impact of 13pc for 2023, she said in a research report released to clients on Wednesday. The banking sector already pays a higher corporate tax of 39pc versus the 29pc rate applicable to other corporate entities. The sector also pays a 39pc tax rate on other income sources like capital gains and withholding tax on dividends. Ms Soorani said an increase in the super tax to 10pc this year will result in base earnings’ estimates to decline by 11pc on an annualised basis.