The Khyber Pakhtunkhwa Federation of Realtors has launched a fervent appeal to the federal government, urging a halt to the imposition of further tax on property transactions, a move that could exacerbate the already fragile economic conditions in the region.
At a recent press conference, Sirajul Haq Yousafzai, head of the federation, expressed grave concerns about the Federal Bureau of Revenue’s (FBR) misleading communications with the International Monetary Fund (IMF).
According to Yousafzai, the FBR has inaccurately represented plans to impose additional taxes on property transfers as a strategy to expand the tax net. He emphasized that these measures could lead to heightened unemployment in Khyber Pakhtunkhwa, a region still recovering from the effects of militancy and terrorism.
Detailing the tax changes since 2016, Yousafzai highlighted that under the tenure of the Pakistan Muslim League-Nawaz (PML-N), a withholding tax of 1 percent was levied on tax filers and 2 percent on non-filers involved in property transactions. He criticized the FBR for its erroneous portrayal of these policies to international stakeholders like the IMF.
The situation seemed to improve in 2018 with the Pakistan Tehreek-e-Insaf (PTI) government, which recognized property as an industry. This recognition led to the formation of an eight-member committee comprising members from the Federation of Realtors of Pakistan. The committee was tasked with addressing industry issues every quarter and aiding in its development. Additionally, the PTI government implemented regulations to promote the commercialization of high-rise buildings, a move that spurred both investment and employment within the sector.
However, the trajectory changed when the Pakistan Democratic Movement-led government assumed office, increasing the withholding taxes for filers to 2 percent and for non-filers to 7 percent. Yousafzai expressed concern over these adjustments, noting their negative impact on the property industry and correlating job losses. More recently, these rates have escalated further to 3 percent for filers and 10.5 percent for non-filers, in what appears to be an effort to comply with IMF requirements.
Moreover, the gain tax also saw an increment, currently standing at 3 percent for filers and 7 percent for those obtaining the e-tax No Objection Certificate (NOC), which Yousafzai described as another detrimental factor to the property sector’s health.
Concluding his statements, Yousafzai made a direct appeal to the Prime Minister of Pakistan, urging the government to reconsider the proposed tax increases on property transfers. He warned that such policies would not only suppress the real estate industry’s potential but could also trigger a rise in unemployment rates, further destabilizing the socio-economic landscape of Khyber Pakhtunkhwa.
The call from the Federation of Realtors adds to a chorus of voices from various sectors across the country, expressing increasing anxiety over tax policies that they claim could hinder economic recovery and growth during an already challenging period. As these discussions continue, all eyes will be on the federal government’s next steps in balancing fiscal responsibilities with economic sustainability.
