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FPCCI proposes tax amnesty for real estate sector

By Shahnawaz Akhter
July 23, 2016

KARACHI: The country’s apex trade body on Friday urged the government to grant one-time tax amnesty to the real estate sector in order to resolve the valuation issue. 

The office bearers of the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) presented this proposal at a meeting after a series of discussions with the realtors and the officials of the Federal Board of Revenue during the last three days.  

The FPCCI proposed general tax amnesty for the under-ground economy to resolve the property valuation issue as well as growth of other sectors.

An official said the FPCCI will present the proposal at a meeting to be held with the Finance Minister Ishaq Dar on July 27.

Some office bearers of the FPCCI raised the objection against the demand of the concessions for only the property sector.

Senior Vice President Khalid Tawab at the FPCCI, who presided over the meeting, said the property valuation by approved valuer of the State Bank of Pakistan was rejected by the FPCCI. 

Tawab said FPCCI president Abdul Rauf Alam is heading the committee to negotiate the matter with the FBR.

The amnesty issue surfaced as representatives of developers and builders expressed concerns that resolving the valuation table for immovable property in 18 cities is not a solution. They said the tax authorities will insist on the source of investment on the declared amount.

Tawab said after the imposition of withholding tax on non-filers the capital is being routed to the property business. He said recently the FPCCI also requested the amnesty for persons having undeclared foreign assets.

Chairman Zubair Tufail of Standing Committee on FBR of the FPCCI said the committee members will provide deputy collector value and fair market value of 18 cities. 

Tufail said the valuation provided by the committee will be agreed with the FBR at the lower rate, which would be increased in line with the market value in the next three to five years.

He said the finance minister also ordered the Directorate of Intelligence and Investigation – Inland Revenue to stop action against developers and builders.

Chairman Hanif Gohar at the Association of Builders and Association said it is a wrong impression that the association had proposed the idea of valuation through the SBP-approved valuers. 

Gohar said ABAD proposed the fixed tax for builders and developers, which has been made part of the legislation.

He said people who bought land at the lower rates along with the routes related to the China Pakistan Economic Corridor are creating the issue.

Gohar said the government should announce the amnesty and the amount generated through it should be used for the foreign debt repayment, which increased to $68 billion.

The FPCCI proposed the tax amnesty on suggestion given by Senator Haseeb Khan, who said the matter of property valuation would be settled between the government and the stakeholders but this should not be done to benefit to non-filers of income tax returns. 

Senator Khan said the issue of asset declaration will surface on scrutiny of the wealth tax by the tax authorities. He said a tax amnesty of around five percent should be given without any probe into the source of investment.

Another committee’s member said the government has given tax exemptions to around 60 housing schemes. The member said around 2-3 billion dollars have been transferred abroad following the introduction of this provision.

Vice President Faisal Dashti at FPCCI recommended the amnesty for all the sectors. 

Dashti said around Rs7,000 billion have been invested in real estate sector of Gwadar and no industry has been established there.