The Lahore Chamber of Commerce and Industry (LCCI) has called for a significant reduction in taxes on the real estate sector to stimulate growth in the construction industry and attract both local and foreign investments. Recognizing the sector’s vital role in driving economic activity, the LCCI organized a seminar titled “Real Estate Taxation” on Wednesday to address the challenges faced by the industry and propose practical solutions.
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Ritz Carlton Reserve Makes Grand Entrance in Middle East
Ummahat Island, Saudi Arabia: Nujuma, a Ritz-Carlton Reserve, the first Ritz-Carlton Reserve in the Middle East was unveiled today on Ummahat Island in the tranquil waters of The Red Sea.
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Islamabad Chamber Calls for Withdrawal of Section 7E to Boost Real Estate
Islamabad, September 28, 2023 – The Islamabad Chamber of Commerce and Industry (ICCI) has issued a call to authorities for the withdrawal of Section 7E from the Income Tax Ordinance, 2001, with the aim of revitalizing investment in the real estate and construction sector.
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Section 7E Compliance Halts Property Transactions in Pakistan
The implementation of the mandatory requirement to comply with section 7E payment has brought property documentations across Pakistan to a near halt.
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Pakistan gives general permission for foreign investment in real estate trust
KARACHI: State Bank of Pakistan (SBP) has allowed general permission for foreign investment in real estate fund listed on country’s stock exchange.
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AVALON – The Most Tech-Enable Real Estate Project In Islamabad
ISLAMABAD: With so many real estate projects in Pakistan on the rise, it’s close to impossible to find the most futuristic & tech-enabled, sustainable, and state-of-the-art project that’s worth investing without breaking the bank while also being trust-worthy.
Having said that, we’ve recently spotted a project that’s taking Islamabad by storm. Their streamers and outdoor billboard are literally everywhere we go.
We did a little digging and found out about this real estate giant, namely AVALON City. The masterplan is in development as Pakistan’s first technological city. This is a state-of-the-art infrastructure designed and idealised as the Future of Real State in Pakistan. Embracing their tagline, they truly want you to ‘Envision Your Lifestyle’.
We found out this project sits at an ideal location of Chakri Road, adjacent to M2 Motorway, ensuring a convenient residence and commercial success for its residents and investors. Have you ever thought about having Smart Homes, Wi-Fi trees, 3D and Virtual Theatres, Electric Bikes, Automated Traffic Control? Well, AVALON City has got it all.
We know what you’re thinking. With all these offerings, they must be expensive as anything but after doing a thorough price comparison, we found out that their prices are very affordable compared to other projects in the vicinity.
The hashtag #AvalonCityIslamabad was trending on social media for the past couple of days.
Don’t believe us? Well, Netizens on social media are going nuts about this.
Some people are comparing it to Saudi Arabia’s The Line project.
While others are just excited that something progressive is coming to Pakistan.
If you’re interested in investing or just getting to know about them, we recommend getting in touch with them directly @ [email protected], +92 (51) 6120517 or www.theavaloncity.com
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Key points of amnesty scheme for real estate sector
KARACHI: The federal government has made amnesty granted to real estate sector to the part of Finance Bill, 2020 in order to get approval from the Parliament.
Deloitte Yousuf Adil Chartered Accountants in their budget explanations said that to stimulate investment in real estate and construction sector, a no-questions-asked amnesty has been introduced.
Under this amnesty the Federal Board of Revenue (FBR) has been restrained from asking question related to source of investment made into the real estate / construction business.
Both previous and current federal governments have launched tax amnesty schemes in 2018 and 2019, albeit the scope of this scheme is limited to investment made in construction sector only.
The proponent of this particular amnesty scheme argues that this would act as a catalyst to increase economic activity in the country thereby improving employment opportunities as number of sub-sectors and small and medium size industries are associated with construction industry.
The newly introduced scheme provides immunity from the provisions of section 111 of the Ordinance , and no questions will be asked regarding source of funds from investors making capital investment in new construction projects in the form of money or land, either as an individual, as an association of persons or a company, subject to conditions as explained below.
For individuals:
Monetary: Investor shall open a new bank account and deposit such amount in it on or before the 31st day of December, 2020
Land: Investor shall have the ownership title of the land at the time of commencement of the Tax Laws (Amendment) Ordinance, 2020
Corporate shareholder / Partner:
Monetary: Such amount shall be invested through a crossed banking instrument deposited in the bank account of such association of persons or company, as the case may be, on or before the 31st day of December, 2020
Land: Such land shall be transferred to such association of persons or company, as the case may be, on or before the 31st day of December, 2020. Provided that the person shall have the ownership title of the land at the time of commencement of the Tax Laws (Amendment) Ordinance, 2020
Registration: The Company or AOP shall be a single object company duly registered under the Companies Act, 2017 or Partnership Act, 1932 as the case may be.
Additional conditions to be met:
• Prescribed IRIS form shall be submitted by the person making investment.
• The investments made shall be wholly utilized in a project.
• Grey structure in case of builders and landscaping in case of developers have been completed on or before September 30, 2022, and duly certified by NESPAK or respective map approving authority.
• Further, for land developer, the following additional conditions should be met;
- 50 percent of plots have been booked for sale and 40 percent of sale proceeds thereof have been received by September 30, 2022 as duly certified by specified chartered accountancy firm.
- 50 percent of the project roads have been laid up to sub-grade level as duly certified by NESPAK.
• The value or price of the land or building shall be higher of
a) 130 percent of FBR assessed fair market value; or
b) At the option of person making investment, lower of the value determined by at least two independent SBP approved valuers.
Exclusion
The following incomes or persons are excluded from the relief provided under the amnesty scheme:
Holder of public office, benamidar or his spouse or dependents; or
Public Listed Company, real estate investment trust or any company whose income is exempt under the Ordinance.
Proceeds of crime including money laundering, terror financing excluding tax evasion.
Restriction of Ownership Changes
• Under the new amnesty, no change in ownership shall be allowed for incomplete projects except where 50 percent cumulative cost on the project has been incurred as certified by prescribed Chartered Accountants firm, with the exception of legal transmission to heirs.
• Inclusion of partners or shareholders after December 31, 2020 is permissible; however, such investors shall not be eligible to avail tax amnesty.
Amnesty to the purchaser
Provisions of section 111 shall also not apply to:
the first purchaser of a building or a unit in the building in respect of the purchase price both in case of new project or existing incomplete project where payment is routed through crossed banking instrument between the date of registration of project with the FBR and September 30, 2022.The purchaser of plot for building construction where the purchase, the payment thereof and commencement of construction has been made on or before December 31, 2020 subject to construction completion by September 30, 2022 and subject to registration of such purchaser with FBR on IRIS portal.
Thus no questions would be asked from the purchaser of building or plot regarding source of funds who complies with the above mentioned conditions.
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FBR sets up special assessment circle for builders, developers
KARACHI: Federal Board of Revenue (FBR) has launched monitoring of sale and purchase in real estate sector by establishing dedicated zone for assessing developers and builders.
Sources in the FBR said that cases of builders and developers had been transferred to special circular established at Large Taxpayers Unit (LTU)-II, Karachi.
According to an official order made available to PkRevenue.com all the cases of tax offices in Sindh and Balochistan had been transferred to the newly established circle.
The sources said that the developers and builders were enjoying the final tax regime for the past several years.
However, through Finance Act, 2017 the taxation of such segments of taxpayers brought under documented economy.
These taxpayers will now require filing true declarations and also providing details of transactions made with their clients.
The special circle will conduct detailed audit of those taxpayers besides obtaining details of buyers.
According to the official order, the special circular for builders and developers established at the LTU-II Karachi would have jurisdiction over those cases which were earlier with the LTU Karachi, Corporate Regional Tax Office (CRTO) Karachi, RTO-II Karachi, RTO-III Karachi, RTO Hyderabad, RTO Sukkur, RTO Quetta and all cases of builders and developers presently assessed in LTU-II Karachi.
The FBR also notified setting up special circles at Islamabad and Lahore. The Islamabad circle will have jurisdiction over cases in Islamabad, Abbotabad, Peshawar, Rawalpind, Faisalabad, Gujranwala, Sargodha and Sialkot.
Further, the Lahore circle shall have jurisdiction over cases in LTU Lahore, CRTO Lahore, RTO-II Lahore, RTOs in Multan, Sahiwal and Bhawalpur.
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Pakistan assures IMF of strengthening taxation on real estate, agriculture income
KARACHI: Pakistan has assured International Monetary Fund (IMF) of removing distortion in taxation system and strengthening taxation on real estate and agriculture income.
The IMF on Monday issued country report on Pakistan after successful $6 billion loan program.
The report said that a large deficit would require aggressive revenue collection.
A multi-year effort will aim to revamp tax policy and tax administration. With less than 1.5 million taxpayers filing tax returns and tax compliance generally very low, tax policy and tax administration measures will center on broadening the tax base while maintaining a low tax rate, aiming to ensure progressivity of the tax system.
The country has agreed to increase additional 4 to 5 percent tax to the GDP by end of 3-year IMF program in order to bring Pakistan tax ratio in line with peer Emerging Markets.
Key measures include:
— Tax policy reforms
In the near term, measures include removing exemptions and preferential treatment to reduce distortions in the tax system and broaden the tax base.
These include the removal of General Sales Tax (GST) exemptions and preferential rates, except for basic food and medicines, a measure that will significantly improve revenues.
Greater inter-provincial harmonization and coordination of GST will also simplify filing procedures and increase compliance.
Overtime, the Pakistani authorities are committed to taking steps to transform the GST into a broad-based VAT and making the PIT fairer and more progressive by raising the upper-end of the PIT structure and consider eliminating Personal Income Tax (PIT) tax credits and deductions for the higher income brackets.
In addition, other tax policy measures include:
(i) further strengthening taxation on real estate and on agricultural turnover or income by provinces;
(ii) ensuring equivalent taxation of all sources of income; and
(iii) eliminating distortionary withholding taxes.
The report said that the tax administration reforms to bolster the authorities’ efforts to collect taxes.
“Implementation of a full, risk-based audit framework will be facilitated by the recent reversal4 of legal provisions limiting the use of tax audits and will be supported by an increase in legal penalties for noncompliance.
Moreover, licenses for the track-and-trace system for excises on cigarettes will be issued by end-September 2019 (structural benchmark), with a system roll out by end-March 2020.
The authorities are also considering options to make Pakistan’s tax administration less fragmented and more business friendly, including through the creation of a new semi-independent national tax authority to collect the main revenue sources.
Finally, the country has committed to not granting further tax amnesties (continuous structural benchmark).
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Finance Bill 2019: Penalty proposed for non-banking real estate transactions
ISLAMABAD: The government has tightened rules for transactions of immovable properties and through Finance Bill 2019 it is proposed that non-banking real estate transactions would liable for penalty.
The Federal Board of Revenue (FBR) said that in order to ensure documentation of real estate transactions and also to ascertain the actual value of a transaction of purchase of asset, persons purchasing immovable property of fair market value greater than rupees five million and one million or more in the case of any other asset, would now be required to make payment for the said purchase through a crossed banking instrument so that transaction can be clearly identified from one bank account to another.
In case of non-compliance, the deductions in respect of depreciation and amortization in respect of such assets shall not be allowed. Further, the amount of purchase shall not be treated as cost for calculation of any gain on sale of such asset.
A penalty at the rate of five percent of FBR value of asset is being be imposed for violation of this requirement.