Pareesa Afreen 
Dec 03, 2025
The Federal Cabinet has approved tax exemptions to support Pakistan’s $1 billion Panda Bond issuance in Chinese capital markets, officials confirmed on Wednesday.
The decision falls under the Sovereign Panda Bond Issuance Programme and was made following a summary submitted by the Finance Division.
Reportedly, all income that results from these Panda Bonds is exempt, including but not limited to principal and interest payments, debt profit, and capital gain.
This move is aimed at making the first-ever Panda Bonds more attractive to offshore investors and securing price competitiveness in the international market.
Without such exemptions, investors might demand higher returns to compensate for tax deductions and increase the country's borrowing cost.
The Finance Division explained that a similar exemption was provided in January 2021 for the other instruments, including Panda Bonds.
However, the Ministry of Law and Justice explained that the 2021 approval does not extend to the 2025 issuance and fresh Cabinet approval is required.
Exemption was given under Clause (75) of Part I of the Second Schedule to the Income Tax Ordinance, 2001, which provided tax relief to foreign investors on debt instruments approved by the government.
The approval by the Cabinet clears the way for Pakistan to proceed with the Panda Bond issuance, a strategic step to diversify external financing sources and strengthen the country's footprint in international debt markets.
