The debate about imposing tax on Pakistan’s property sector is hot these days. Tax officials from Federal Board of Revenue believe that the recommended tax policy would widen the tax network and earn huge profit for the Government. They believe that since the growth of steel and cement industry is directly linked with the property sector, the new policy has to be designed carefully. The supporters of this recommended tax believe that the stable property sector of Pakistan has enough potential to strengthen country’s deteriorating economy.
It is also a fact that the peak years of Pakistan real estate has earned many people billions of tax free rupees, which suggests huge potential of this sector as a tax payer. The sudden and huge success of property sector in Pakistan is no mystery as the year 2001 brought a huge wave of direct foreign investment from the overseas Pakistanis, this amount was invested in the property business giving Lahore real estate the most prominent surge in the country’s history.
The few complications that hinder the approval of this recommendation are legal because property sector has so far been exempted from tax. Also that the property transactions are believed to be the matter of concern for provincial government and tax collection is duty of the federal government, the legal experts believe that they can device a policy that can bisect the concerned issues neatly.
The suggestion was bound to affect the stakeholders of property sector and they have shown reservation against it. The property dealers and investors believe that the taxation law will set them aside and not watch out for their interests. While some property experts and analysts believe that although there is limited activity in Pakistan real estate nowadays, but the investors cannot wait any longer to reinvest the revenue generated from the property boom of early 2000s. This is why the tax managers believe that now is the time to drag property sector in tax circle.
As long as a policy favors Pakistan’s economy, a consensus should be developed on it and genuine efforts should be made in this regard to satisfy the real estate investors and dealers. At the same time, it is very important to fix the loopholes in overall tax payment system of Pakistan so that the potential tax payers cannot evade tax.
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