Realty business: Yet another amnesty scheme in the offing
Proposed move will whiten about 75% of black money in informal economy
Proposed move will whiten about 75% of black money in informal economy. PHOTO: FILE
ISLAMABAD:
The government is set to announce yet another tax amnesty scheme for the real estate industry as a result of fierce lobbying by ruling party legislators and property dealers who claim that the market has sunk due to new valuation tables – for the purposes of taxation – of property prices in major cities of the country.
The latest amnesty scheme – the fourth in last three years – will whiten about 75% of black money circulating in the informal economy after the previous deal with the realty sector that the government had struck in July could not fully address the sector’s problems, officials privy to the developments said.
Real estate set to win biggest tax amnesty
The government is considering offering people to declare their hidden assets by paying a fixed rate, which will be significantly lower than 5%, said the officials. It may be as low as 3%.
The tax amnesty package will be presented in the National Assembly during the next few days, senior government functionaries confirmed to The Express Tribune. In order to keep a low profile, the government may not promulgate a presidential ordinance or table a new bill in the National Assembly, they added.
The fresh amendments could be proposed in the final draft of the already under discussion “Income Tax (Amendment) Ordinance-2016” that the government presented in the lower house of parliament last month to provide permanent legal cover to a deal that it struck with the realty sector in July this year.
At present, taxes on property transactions are determined through the DC rate at the provincial level while federal taxes are paid on the basis of FBR-notified property rates. From August, the FBR notified 300% to 800% increase in property rates over and above the DC rates.
However, many analysts view the government’s move discriminatory and violation of Article 25 of the Constitution.
The futility of tax amnesty schemes
The government will propose changes in Section 68 that deals with fair market value, Section 111 that deals with unexplained income or assets and Section 236-P that deals with tax on banking transactions of the Income Tax Ordinance 2001 to give effect to the amnesty scheme, said the sources.
The FBR spokesman did not comment on the matter. The property issue is under discussion and a final meeting in this regard will be held with Finance Minister Ishaq Dar on his return from Washington, said Mian Abdul Manan, the PML-N MNA from Faisalabad.
The FBR is of the view that circulation of money has been stopped due to changes in tax laws and the matter has to be decided again, said Abdul Manan.
The likes of Pervez Malik, the ruling party MNA from Lahore, and Khawaja Saad Rafique, Minister for Railways, who are said to be the owners of a housing society, and others urged the prime minister to give a comprehensive amnesty scheme this time, said the sources. They said after that the prime minister had asked the FBR to introduce the new package. Both parliamentarians were not available for comments.
Property dealers claim that transactions have come to a halt due to the difference in property valuation rates of provinces and the federal government. However, FBR officials said there was a decline in transactions, but lately these have started to pick up.
Will the new property survey make housing too expensive for Pakistan's poor?
The officials said property transactions were only 25% less than the previous year, but the federal revenue collection during the August-September period was up to 70% higher than the comparative period of the last fiscal year.
It will be the fourth scheme in three years. The previous three schemes – including the traders amnesty scheme – had failed to yield the desired results.
In order to ease pressure from the realty sector, the tax amnesty scheme is inevitable in the prevailing circumstances, said Ashfaq Yousaf Tola, a renowned chartered accountant.
Published in The Express Tribune, October 1st, 2016.
The government is set to announce yet another tax amnesty scheme for the real estate industry as a result of fierce lobbying by ruling party legislators and property dealers who claim that the market has sunk due to new valuation tables – for the purposes of taxation – of property prices in major cities of the country.
The latest amnesty scheme – the fourth in last three years – will whiten about 75% of black money circulating in the informal economy after the previous deal with the realty sector that the government had struck in July could not fully address the sector’s problems, officials privy to the developments said.
Real estate set to win biggest tax amnesty
The government is considering offering people to declare their hidden assets by paying a fixed rate, which will be significantly lower than 5%, said the officials. It may be as low as 3%.
The tax amnesty package will be presented in the National Assembly during the next few days, senior government functionaries confirmed to The Express Tribune. In order to keep a low profile, the government may not promulgate a presidential ordinance or table a new bill in the National Assembly, they added.
The fresh amendments could be proposed in the final draft of the already under discussion “Income Tax (Amendment) Ordinance-2016” that the government presented in the lower house of parliament last month to provide permanent legal cover to a deal that it struck with the realty sector in July this year.
At present, taxes on property transactions are determined through the DC rate at the provincial level while federal taxes are paid on the basis of FBR-notified property rates. From August, the FBR notified 300% to 800% increase in property rates over and above the DC rates.
However, many analysts view the government’s move discriminatory and violation of Article 25 of the Constitution.
The futility of tax amnesty schemes
The government will propose changes in Section 68 that deals with fair market value, Section 111 that deals with unexplained income or assets and Section 236-P that deals with tax on banking transactions of the Income Tax Ordinance 2001 to give effect to the amnesty scheme, said the sources.
The FBR spokesman did not comment on the matter. The property issue is under discussion and a final meeting in this regard will be held with Finance Minister Ishaq Dar on his return from Washington, said Mian Abdul Manan, the PML-N MNA from Faisalabad.
The FBR is of the view that circulation of money has been stopped due to changes in tax laws and the matter has to be decided again, said Abdul Manan.
The likes of Pervez Malik, the ruling party MNA from Lahore, and Khawaja Saad Rafique, Minister for Railways, who are said to be the owners of a housing society, and others urged the prime minister to give a comprehensive amnesty scheme this time, said the sources. They said after that the prime minister had asked the FBR to introduce the new package. Both parliamentarians were not available for comments.
Property dealers claim that transactions have come to a halt due to the difference in property valuation rates of provinces and the federal government. However, FBR officials said there was a decline in transactions, but lately these have started to pick up.
Will the new property survey make housing too expensive for Pakistan's poor?
The officials said property transactions were only 25% less than the previous year, but the federal revenue collection during the August-September period was up to 70% higher than the comparative period of the last fiscal year.
It will be the fourth scheme in three years. The previous three schemes – including the traders amnesty scheme – had failed to yield the desired results.
In order to ease pressure from the realty sector, the tax amnesty scheme is inevitable in the prevailing circumstances, said Ashfaq Yousaf Tola, a renowned chartered accountant.
Published in The Express Tribune, October 1st, 2016.