Islamabad
The Federal Bureau of Revenue (FBR) is devising rules for providing overriding powers to independent board on pattern of Malaysian model for fixing valuation of property as the tax machinery proposed amendment to the Finance Bill 2016-17 to check black money investing into this dead hole instead of going into any productive sector.
The FBR’s Member Inland Revenue (IR) Policy Rehmatullah Wazir raised question before the Senate Standing Committee on Finance whether they wanted to make Pakistan another Dubai or wanted to see progress like South Korea. “Now industrialists are shifting their investment into property keeping in view rapid and sudden gains,” he added.
Keeping in view rapid surge in prices of property, he said that the FBR proposed powers with commissioner for fixing the value of property. “We are devising rules under which independent board will fix valuation of property in eight days on the pattern of Malaysian model,” he added.
The Senate Standing Committee on Finance under chairmanship of Senator Saleem Mandviwalla here at the Parliament House on Monday continued deliberations to finalise their recommendations for budget proposals 2016-17. Now Finance Committee of both Senate and National Assembly will jointly meet today (Tuesday) to make effort for evolving consensus on mutually agreed proposals which will then be adopted by the Senate and finally forwarded to National Assembly for final consideration of approval or rejection on money bill.
However, FBR’s Member IR Policy said that highly depressed valuation of property were underway and cited an example that land transaction was done in Rs120 million but it was registered in just Rs5.7 million to evade taxes. There should be explanation on such depressed valuation of property so the FBR proposed to give overriding powers to commissioner for evaluating the property but the FBR was considering establishing independent board with mandate of 8 days to finalise valuation on pattern of Malaysia. “It’s aimed at checking black money,” he added.
Senator Kamil Ali Agha belonging to PML-Q said that the valuation of property should be fixed at local levels so the FBR should discuss it with provinces. If the FBR decided to go ahead unilaterally it would be considered as forced act, he added.
Rehmatullah Wazir replied that then Pakistan would become Dubai instead of South Korea. He said that there were 472 big companies which were contributing more than 72 percent in tax collection. Around 0.7 million businesses filed their returns with average shown income of Rs18,000 per annum.
In India, he said, 4.5 percent population filed their returns and Pakistan’s number of return filers could go up to 8.5 million from existing 1.1 million if the country’s 4.5 percent population started filing returns. He also said that the country’s revenue would be increased by Rs136 billion if the number of return filers would go up to 8.5 million.
The Builders Association (ABAD) Vice President Arif Jeeva told the Senate Standing Committee that the FBR introduced fixed tax regime as earlier under hand deals were underway with tax machinery at the cost of national exchequer. He said that the FBR required to insert previous projects under the new fixed regime otherwise the fixed target of Rs8 billion from land developers for the next fiscal year would not be achieved. He also raised the issue of valuation of property being proposed to give to FBR saying that it should be in hands of provinces. He also demanded of changing taxation regime for cement on per kg basis saying that it would increase cost of construction of housing.