Pakistan's government has imposed five per cent federal excise duty on twelve types of non-fund banking services, including letter of credit (L/C) issuance.

The authorities estimate that the new levies introduced in Pakistan's latest budget may generate nearly US$100 million in additional revenues in next fiscal year 2007-08.

Bank levies

As well as the duty on L/Cs issuance, other bank services on which new charges will apply include bank guarantees, brokerage, issuance of pay orders and demand drafts, bill of exchange charges, money transfers, as well as commissions on bill discounting and foreign exchange dealings.

Retail banking services, including safe deposit locker fees and safe vault charges as well as credit and debit card issuance, processing and renewal, will also be subject to the five per cent levy.

Budget headlines

The changes are part of Pakistan's 2007-08 budget, the headlines of which included 15 per cent increases in the salaries of government employees whose pensions have also been raised in the budget from 15 to 20 per cent.

Minimum wages of unskilled workers, meanwhile, have been increased from the equivalent of around US$66 to US$76 per month.

This article represents the views of the author and not necessarily those of the ICC or any of the other partners in DC-PRO.