FPCCI’s Businessmen Panel demands revision of valuation tables for industrial property

Businessmen Panel of the Federation of Pakistan Chambers of Commerce & Industry (FPCCI) Vice Chairman Zakaria Usman, who is also the ex-president of FPCCI, has requested the government to revise fair market value tables for industrial property. Usman believes that, contrary to government’s plans, these new rates can potentially block the growth of the industrial sector in the country. “Due to the increased rates, the subsidies given to the industries in Pakistan stand void,” he said.

The industrial sector of Pakistan faces difficulties due to power, water and gas shortage.  Reportedly, many industries have already moved their work stations to other countries in the region, which has in turn increased the inflation and unemployment rate in Pakistan. All of these factors have combined to cause economic crises here and the new taxes on the industrial sector will only make the situation worse.

When the amendments in the Income Tax Ordinance 2001 were proposed, the Federal Board of Revenue (FBR) claimed that the changes will end speculation trade in the property sector, convincing investors to look for opportunities in other sectors including the manufacturing industry. Per the FBR’s perception, the shift of investment focus to the industrial sector will contribute to the creation of jobs in the country and strengthen the economy. But, according to Usman, the new valuation rates will rather do the opposite of that.

In Karachi alone, the per square yard rate of Category I industrial plots, which includes Site Industrial Area, Federal B Area and Landhi Industrial Estate, has been increased from PKR 2,200 to 12,000, which is a rise of 445%. For taxation purposes, the new per square yard rates for Category II and III areas has also increased by 8 to 10 times. The constructed industrial property is treated in a similar manner and in some cases, their fair market value is higher than their actual market price.

If the government intends to direct investment focus from the real estate market to the industrial sector, taxes on the industrial property should be collected per the old Deputy Commissioner (DC) rate – after all, the main purpose of the new taxes was to promote investment in industry.