‘Real estate no longer a safe haven for black money’

Investors will be incentivised for documentation, says adviser to PM on revenue

ISLAMABAD: Real estate will no longer be a safe haven for black money after the passage of the recent finance bill, Adviser to the Prime Minister on Revenue Haroon Akhter Khan said.

Speaking in a private news channel program, Haroon Akhter said that over the years, thousands of billions rupees had been invested in real estate to evade taxes and secure ill-gotten wealth.

“After passage of the Finance Bill 2016, this money would be brought into the tax net and price of property would be evaluated by third party under the notification of the State Bank of Pakistan,” he said.





Background

The value of land, in the on-going scenario where government officials have been unable to keep the official records updated, is estimated by means of [calculated] conjecture by the deputy commissioner’s office (DC). This DC value is veritably understated and has not been updated for much of the country over the years.

The disparity between the DC price and the market price meant that despite government’s effort to increase taxes on property transactions to restrain the real-estate bubble, the measures made little difference, since taxes are calculated as a percentage of heavily undervalued DC prices.

However, according to Khan, winds of change are here. “Billions of rupees of black money have been invested in this sector, right under the nose of the government, but now authorities will discontinue the DC rate and a third party evaluation would be done where the government would deem it necessary.”



The adviser was quick to add a note of caution. “This decision is not meant to discourage investors but is aimed at bringing this money into the tax net.

“We will provide incentives for documentation of this sector. We already have certain rules for the purpose and more rules will be put in place.”

The Adviser, possibly referring to Panama Papers, said that economies across the world are struggling with tax evasion and flight of wealth and Pakistan needs to fight along with them. “It is an opportunity for us to bring back black money as well as tax it locally to flourish our economy.”

Published in The Express Tribune, July 1^st, 2016.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.