Pakistan’s benchmark stock index fell 0.15% on Friday, dragged by concerns about tax hikes after the government announced a date for the annual budget.

According to the PSX website, the KSE-100 index shed 108.92 points to close at 73,754.01 against the previous closing of 73,862.93.

Pakistan will present its annual budget later than expected on June 12, a statement from Parliament said on Thursday, the second postponement this week.

The budget would come ahead of Islamabad seeking a new loan from the International Monetary Fund in view of last month’s advance discussions about a long and longer Extended Fund Facility.

“45% tax on dividend and capital gain. Don’t know how reliable this is? Assuming IF this is True.. simple maths and accounting will explain that this 45% is not actually 45% but is far lower,” Mohammed Sohail, the Topline Securities CEO, said in a social media post.

He was of view that banks many years back were moved from full and final tax to the adjustable income tax. Banks average pre-tax margin was 40 per cent, he said and added that a company makes Rs100m in dividend. “Then at the end of the period when they file tax return they will adjust all expenses. With 40% margin [dividend after expenses will be Rs40m] pays 49% income tax at Rs20. So the actual effective tax on dividends by this bank after expenses is around 20% (not 45%),” he said.

“In case of non bank above calculations would be at the rate of 29% corporate tax rate. Meaning Rs15m withholding tax on Rs100m dividend will result in actual tax of Rs11.6m…thereby a refund of Rs3.4m,” Sohail said.

The PSX analyst added that such a scenario can help high-net-worth individuals-led corporations wherein they can increase their accounting expenses to lower the effective tax. “Rich individuals can easily form a firm to save on such taxes.”

Meanwhile, Pakistan’s central bank is widely expected to cut its key interest rate next week by 100 basis points after holding it at a record 22% for seven straight policy meetings, according to a Reuters poll of market watchers.

Analysts believe the market is reacting to reports of higher taxes, in order to meet revenue measures pushed for by the IMF.

“Given the market has almost doubled over the past year with some names providing multifold returns, investors would rather book capital gains at a 15% tax rate before June 30, than the proposed and speculated marginal tax rate which could be up to 45% in the highest bracket,” said Adnan Sheikh, the assistant vice president of research at Pak Kuwait Investment company.

The KSE 100 index is up 12% year to date, and 72% in the last 12 months.