Negotiations between the IMF and FBR on reducing taxes for Pakistan’s real estate sector have entered the final stage, with the government aiming to boost investment, related industries and employment opportunities.
According to FBR officials, negotiations with the IMF are ongoing over possible relief for the real estate sector in the next federal budget.
The proposed relief includes a reduction in withholding tax on the purchase and sale of property, as well as lower property rates.
Officials said any reduction in real estate taxes will be made part of the budget only after IMF approval.
Business community seeks 40% tax cut
The business community has demanded up to a 40% reduction in withholding tax on property transactions and property rates. The federal government is trying to convince the IMF to allow easing of tax rates in the real estate sector.
Officials say the government wants investment in property and construction to increase so related industries can run smoothly and new jobs can be created.
FBR says IMF approval required
The issue of real estate taxes was also raised on Monday during a meeting of the National Assembly Standing Committee on Finance.
Member Inland Revenue Policy told the committee that FBR does not have the authority to reduce taxes on the property business on its own. The official said approval from the IMF would be required before any reduction could be implemented.
The committee was also informed that the detailed court decision regarding Section 7A related to the real estate sector is still awaited.
Officials said a notification will be issued after the court’s detailed decision is received.
Windfall gains tax on oil marketing companies
Separately, the government is considering imposing a windfall gains tax on oil marketing companies in the upcoming budget.
The money collected through this tax is expected to be used for petroleum subsidies to consumers, relief in electricity tariffs and reduction of the fiscal deficit.
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