The federal government has proposed abolishing the Capital Value Tax on foreign assets through the Finance Bill, citing the levy’s failure to meet its original policy objectives.
Budget documents state that the CVT on foreign assets had discouraged Pakistani citizens from voluntarily declaring overseas holdings, undermining the government’s broader documentation and compliance goals.
The government said declared foreign assets are already part of the official record and have taxes paid on them, making the CVT an unnecessary barrier to voluntary disclosure.
The Finance Bill states that retaining the CVT was actively discouraging citizens from bringing their foreign assets and financial positions into the formal documented economy.
The government said removing the tax is expected to encourage Pakistani citizens to formally declare their overseas assets and financial standing through official and legal channels.
The Finance Bill further states that the abolition is projected to improve tax compliance, expand the documented economy, and contribute to an increase in overall government revenues.
