Karachi, May 10, 2025 – The Overseas Investors Chamber of Commerce and Industry (OICCI) has put forward a comprehensive set of recommendations to the Federal Board of Revenue (FBR), aimed at identifying and documenting undeclared immovable properties across the country.
These proposals, part of OICCI’s tax recommendations for the fiscal year 2025-26, focus on increasing transparency and tightening regulatory oversight in the real estate sector, which is often used as a vehicle to conceal unreported wealth.
The OICCI emphasized that immovable properties can be broadly categorized into two main types: (a) agricultural properties, and (b) non-agricultural properties. As a first step toward better enforcement, the FBR should collect and digitize ownership records of both categories. This data should then be cross-checked with the wealth statements submitted by taxpayers in order to identify undeclared properties and assess the ownership status.
To further support this initiative, the OICCI proposed the implementation of a withholding tax on all immovable property—including agricultural land—at a rate of 0.5% of the FBR-assessed value, to be collected annually alongside property tax by provincial authorities. This tax, however, should be adjustable against the owner’s total income tax liability. The proposal also suggests that any income tax collected on agricultural land be creditable against the agriculture income tax collected by the provinces. Small properties may be excluded from this regime to protect lower-income property holders.
According to OICCI, this initiative would not only enhance documentation in the real estate sector but also play a vital role in uncovering hidden wealth. A key provision of the proposal is that capital gains tax (CGT) exemptions on the sale of immovable properties—typically granted after 4–6 years of ownership—should only be available if the property was declared at the time of acquisition. Moreover, such exemptions should be limited to just one property transaction every three years per taxpayer.
The OICCI stressed that FBR-determined property values should be brought closer to fair market value to prevent underreporting. Real estate, the OICCI noted, has long been a haven for illicit money flows due to its traditionally undocumented nature.
These proposals aim to establish a digital paper trail of property transactions, capturing the identities of buyers and sellers, declared values, and transaction details. This would greatly assist the FBR in building a reliable real estate database and national property ownership registry, laying the foundation for greater fiscal accountability and transparency.