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Taxation system of Pakistan: structure

Tax Jurisdiction

Under the 1973 constitution, Federal and Provincial Governments are assigned separate revenue
jurisdictions. The Federal Government has the constitutional right to levy a wide range of direct
taxes including:

* Personal and corporate tax (excluding tax on agricultural income)

* Capital taxes (excluding tax on immovable property)

* Estate duty and gift tax (since abolished)

The Provinces are empowered to legislate in respect of direct taxes not reserved to the Federal
Government. The provinces levy the following direct taxes:-

* Tax on agriculture income

* Urban immovable property tax

* Capital gains tax on land and building

* Land Revenue tax

* Taxes on professions, trades and callings.


Question: Compare and contrast credit ratings of PACRA, Moody
and Standard and Poor’s?

Standard
Moody's PACRA Credit worthiness
& Poor's
An obligor has EXTREMELY STRONG capacity to meet its
Aaa AAA AAA
financial commitments.
An obligor has VERY STRONG capacity to meet its
Aa1 AA+ AA+ financial commitments. It differs from the highest rated
obligors only in small degree.
Aa2 AA AA Same as above
Aa3 AA- AA- Same as above
An obligor has STRONG capacity to meet its financial
commitments but is somewhat more susceptible to the
A1 A+ A+
adverse effects of changes in circumstances and economic
conditions than obligors in higher-rated categories.
A2 A A Same as above
A3 A- A- Same as above
An obligor has ADEQUATE capacity to meet its financial
commitments. However, adverse economic conditions or
Baa1 BBB+ BBB+ changing circumstances are more likely to lead to a
weakened capacity of the obligor to meet its financial
commitments.
Baa2 BBB BBB Same as above
Baa3 BBB- BBB- Same as above
An obligor is LESS VULNERABLE in the near term than
other lower-rated obligors. However, it faces major ongoing
Ba1 BB+ BB+ uncertainties and exposure to adverse business, financial, or
economic conditions which could lead to the obligor's
inadequate capacity to meet its financial commitments.
Ba2 BB BB Same as above
Ba3 BB- BB- Same as above
An obligor is MORE VULNERABLE than the obligors rated
'BB', but the obligor currently has the capacity to meet its
B1 B+ B+ financial commitments. Adverse business, financial, or
economic conditions will likely impair the obligor's capacity
or willingness to meet its financial commitments.
B2 B B Same as above
B3 B- B- Same as above
Caa CCC CCC An obligor is CURRENTLY VULNERABLE, and is
dependent upon favorable business, financial, and economic
conditions to meet its financial commitments.
Ca CC CC An obligor is CURRENTLY HIGHLY-VULNERABLE.
The obligor is CURRENTLY HIGHLY-VULNERABLE to
C C nonpayment. May be used where a bankruptcy petition has
been filed.
An obligor has failed to pay one or more of its financial
C D D
obligations (rated or unrated) when it became due.
Preliminary ratings may be assigned to obligations pending
e, p pr Expected receipt of final documentation and legal opinions. The final
rating may differ from the preliminary rating.
Rating withdrawn for reasons including: debt maturity, calls,
WR puts, conversions, etc., or business reasons (e.g. change in the
size of a debt issue),or the issuer defaults.
This rating was initiated by the ratings agency and not
unsolicited unsolicited
requested by the issuer.
This rating is assigned when the agency believes that the
obligor has selectively defaulted on a specific issue or class
SD RD of obligations but it will continue to meet its payment
obligations on other issues or classes of obligations in a
timely manner.
Brief Summary of the contrast between Moody’s, PACRA and Standards & Poor’s
(S&P)

Moody's S&P PACRA


Long-term Short-term Long-term Short-term Long-term Short-term
Aaa AAA AAA Prime
Aa1 AA+ AA+
A-1+ A1+
Aa2 AA AA High grade
P-1
Aa3 AA- AA-
A1 A+ A+
A-1 A1
A2 A A Upper medium grade
A3 A- A-
P-2 A-2 A2
Baa1 BBB+ BBB+
Baa2 BBB BBB Lower medium grade
P-3 A-3 A3
Baa3 BBB- BBB-
Ba1 BB+ BB+
Non-investment grade
Ba2 BB BB
speculative
Ba3 BB- BB-
B B
B1 B+ B+
B2 B B Highly speculative
B3 B- B-
Caa1 CCC+ Substantial risks
Not prime
Caa2 CCC Extremely speculative
Caa3 CCC- C CCC C
In default with little
CC
Ca prospect for recovery
C
C DDD
/ D / DD D In default
/ D

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