PTBP Web Desk
The sub-committee of the National Assembly Standing Committee on Finance recently postponed its third meeting, which was set to discuss the critical “The Tax Laws (Amendment) Bill, 2024.” The meeting, originally scheduled for Friday at the Federal Board of Revenue (FBR) Headquarters, was deferred to the following week due to the absence of the FBR chairman and the unavailability of a suitable meeting room. This delay has raised concerns among stakeholders, particularly from the real estate sector, who are closely monitoring the proposed amendments.
The sub-committee meeting was expected to take place at the FBR House, but logistical issues compounded the situation. The unavailability of the boardroom on the third floor of the FBR Headquarters was cited as a primary reason for the postponement. Furthermore, the absence of the FBR chairman added to the challenges. Upon entering the Skylight Conference Arena on the eighth floor, the sub-committee chairman, Bilal Azhar Kayani, expressed his dissatisfaction. He questioned the FBR’s readiness, stating, “If the FBR is not ready to give us a meeting room on the third floor, we will not convene the meeting.” He further emphasized the importance of the FBR chairman’s presence, adding, “How can we convene a meeting without the FBR chairman?” As a result, the meeting was postponed to the following week.
Despite the postponement, the meeting saw virtual participation from key stakeholders. Arif Habib, chairman of Arif Habib Dolmen REIT Management Limited (AHDRML), and representatives from the Association of Builders and Developers of Pakistan (ABAD) joined the session online. Their input was crucial, especially given the real estate sector’s vested interest in the proposed tax amendments.
During the sub-committee’s previous meeting, Dr. Najeeb Memon, FBR’s Member Policy, had highlighted ongoing discussions within the FBR. He revealed that the board was considering allowing property purchases of up to Rs 10 million without requiring buyers to disclose their income sources. However, he clarified that no final decision had been made. This proposal is part of broader efforts to balance tax compliance with economic growth, particularly in the real estate sector.
The real estate sector has been vocal about its concerns regarding “The Tax Laws (Amendment) Bill, 2024.” Industry experts have recommended that the government exempt property transactions of up to Rs 50 million from mandatory income source disclosure. They argue that this measure, if implemented for at least one year, could significantly boost property registrations and stimulate economic activity.
Currently, the bill proposes that no individual can purchase property worth more than 130% of their declared liquid assets in the previous tax returns. If the property value exceeds this threshold, buyers must provide an explanation of their income sources. Real estate representatives have criticized this clause, warning that it could deter investment and grant excessive powers to tax officials. They fear that such measures might stifle growth in an already struggling sector.
Real estate plays a pivotal role in Pakistan’s economy, contributing significantly to employment and GDP. Representatives from ABAD pointed out that the sector is already burdened with high taxes, estimating a tax rate of around 115%. They expressed concerns that the proposed amendments could further discourage investment, driving capital to international markets like Dubai. To address this, they urged the government to adopt policies that encourage corporate developers and streamline property registration processes. One suggestion included collecting filers’ information during property registration to enhance transparency without stifling growth.
The real estate sector’s apprehensions are not unfounded. The proposed bill could have far-reaching implications, potentially hampering investment and slowing economic recovery. On the other hand, the FBR’s stance reflects the need for stricter tax compliance to curb tax evasion and increase revenue. Striking a balance between these opposing needs remains a key challenge for policymakers.
The National Assembly Standing Committee on Finance has tasked the sub-committee, chaired by Bilal Azhar Kayani, with recommending an exemption threshold for the bill. The sub-committee’s role is crucial in ensuring that the final legislation addresses the concerns of all stakeholders while aligning with the country’s economic goals. The next meeting, now scheduled for the following week, will be pivotal in shaping the bill’s final form. Stakeholders are hopeful that the FBR chairman’s presence will facilitate a more productive discussion.
