• Wednesday, May 23, 2018

Sweeping changes in real estate expected

Discussion in 'Pakistan Economy' started by Kabira, May 7, 2018.

  1. Kabira

    Kabira ELITE MEMBER

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    The most fundamental reform announced in the new tax amnesty scheme — and later incorporated in the budget for the next fiscal — seeks to discourage the use of real estate as a parking lot for tax-evaded and illegal money, and to expand the existing, narrow tax base.

    But many are sceptical of the success of the scheme, insisting that the government is unlikely to achieve its targeted results. Opinion also remains divided on the potential impact of the proposed reform on the real estate market as many believe that it could dissuade overseas Pakistanis from sending money back home for investment in property.

    To begin with the new incentives offer non-taxpayers a way to legalise their existing undeclared assets at home (and abroad) by paying a nominal tax.

    From next financial year, however, those, including non-resident Pakistanis, buying property worth more than Rs4 million will have to be tax filers in Pakistan. Further, the federal government has reduced the adjustable advance income tax rate to just one per cent of the price of the property declared at the time of its registration.

    The provinces have also been recommended to cut their total (un-adjustable) property registration tax to one per cent and abolish other levies like stamp duty, capital value tax (CVT) and so on. This will significantly slash the total burden of non-adjustable and adjustable taxes on registration of a property to one per cent each.

    “You may see a correction going forward in the present price of properties whose rates are higher than their actual (market) values because of illegal and tax-evaded money parked there,” says an analyst

    In order to ensure that the properties are registered at their market value, the government also proposes to do away with the current Federal Board of Revenue (FBR) rates implemented for the purpose of charging advance income tax and (provincial) DC rates — used to calculate provincial taxes and levies.

    The scheme gives the government the right to acquire any property within six months of its registration by paying 100pc more than the registered price from the next fiscal. This assumes no one will register a property for less than 50pc of its market value.

    For properties registered after July 1, 2019, the government will have the right to acquire them by paying 75pc more than the registered price and for properties registered after July 1, 2020, the pre-emption rate will drop to 50pc and stay at that rate for future years. Policymakers expect these actions will ensure that properties are registered at 67pc of their actual market value.

    The measures are almost a replica of a similar initiative implemented in India.

    “This will be a revolution in the real estate market and help document the economy, create legal wealth in Pakistan and make available billions for new investments,” notes a KPMG Taseer Hadi & Co analyst in his comment on the scheme.

    “We believe that a lot of people will want to take advantage of this scheme though we see the number of transactions rising before the start of the next fiscal as people are scared of the change and will most likely prefer to enter into real estate before the new rules take effect.

    “Those still willing to remain non-filers will go for properties priced less than Rs4m but will have fewer choices.”

    It goes on: “You may see a correction going forward in the present price of properties whose rates are higher than their actual (market) values because of illegal and tax-evaded money parked there.

    “The smaller and cheaper properties will however remain stable and may see a small appreciation in the price with the passage of time. We expect the people to get used to the new regime and investors to feel more comfortable dealing with a simpler and systemic tax system.”

    But he agrees that it will be difficult for the federal government to convince the provinces to cut their taxes and levies to just one per cent, something which is crucial for its success.

    The property market tax reform is not the first effort being made by the Pakistan Muslim League-Nawaz government to tax the real estate market and discourage parking of ‘black’ money in the sector. None have succeeded in delivering the desired results though.

    A leading businessman, who has interests in textiles and real estate in Lahore, expressed his strong reservations about the new tax scheme to force non-filers to become part of the tax net.

    “None of the measures announced by the government in its tax amnesty scheme or in the next budget address the real question: Why non-filers agree to pay double the tax but do not want to become part of the country’s tax system? Why taxpayers are opting out of the tax net? Unless the real issues that are keeping people out of the tax net are addressed no incentive or punishment will work.”

    He was of the opinion that the new reform will only result in a decline in remittances sent by Pakistanis working and living abroad.

    “Almost half of the $20 billion remittances go into real estate every year. Why would any overseas Pakistani want to invest in property here if they have to register themselves as a taxpayer and create problems for themselves? After ruining exports, this government is now after remittances. Next year you will see a substantial decrease in the amount of remittances sent back home.”

    Published in Dawn, The Business and Finance Weekly, May 7th, 2018
    https://www.dawn.com/news/1406018/sweeping-changes-in-real-estate-expected


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    Last edited by a moderator: May 7, 2018
  2. AZADPAKISTAN2009

    AZADPAKISTAN2009 ELITE MEMBER

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    Stupid move

    So if you are investing lets say 100,000 USD into Pakistan Property you have to file Tax first ? Why if you don't live there ?

    Lets say you live in Saudi Arabia or UAE or UK or USA or Australia or Canada or South Africa
    Why would you file tax in Pakistan if you don't live there

    Lets say a worker in Saudi Arabia of Pakistani decent saved 40,000 USD after working their 10 years , finally brings back money to Pakistan why would he stash that money in Bank when value of Rupee Tanks by 50 rupees every 1 year? The man worked his *** off for 10 years and paid his due in Saudi arabia where he lived 10 years

    So if he comes come home he has to file Tax 1 year prior ? lol what Why should you file taxes for year for which you never lived in Pakistan ????? Hahahahahaa



    Comparing Nawaz Sharif and his dirty Daughter with working Class Pakistani is a joke
    Working class people at most have 10,000 USD or 40,000USD

    Nawaz Sharif and his daughter and Sons have property and Business worth Millions and that money was taken from Pakistan there is a huge difference and unlike working class Pakistani people they are known "POLICIAN FAMILY" who have no history of money transmit
    How they made Millions , and may be even half billion usd


    Solution to Pakistan's Problem is
    a) 30% Sales Tax
    b) Impose Sales Tax on Agricultural Land
     
    Last edited: May 7, 2018
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  3. Kabira

    Kabira ELITE MEMBER

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    I don't get that either, why overseas Pakistanis need to file tax returns in Pakistan?
     
  4. WebMaster

    WebMaster ADMINISTRATOR

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    Most of the Noon league real estate is in India, U.K. So this is targeted towards Zardari land mafia, common public and overseas investors. :D
     
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  5. AZADPAKISTAN2009

    AZADPAKISTAN2009 ELITE MEMBER

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    Well in western world the value of property is set by Housing Trend / Plus over al statistics of house sales based no size and bedrooms and washrooms. How many floors you have a place like RAIWIND PALACE property tax would be 5,000 USD per month about 5 lack per month just on house/palace


    IS NAWAZ SHARIF PAYING 60 LAKH FOR RAIWIND PALACE YEARLY?



    BLACK MONEY TO WHITE CONVERSION:omghaha:
    To begin with the new incentives offer non-taxpayers a way to legalise their existing undeclared assets at home (and abroad) by paying a nominal tax.

    • There is a difference between a person who stole Millions from Pakistan and setup Empire overseas vs a Man who worked 9 to 5 Working class job making minimum wage

    People don't put money in Pakistani Bank becasue Government steals from the Bank accounts with various form of taxes and the value of rupee falls like shit every time nawaz sharif has a upset stomach


    Make 1 Big Giant Government Account connect NADRA id numbers to tax filing records
    hire a software company get list of none filers based on NADRA ID omit people live out of Pakistan

    Collect

    1- Sales Tax 30 % on goods bought and sold in Pakistan
    2- Agricultural Land Tax , on People who own Agricultural Land


    Collect 30% from CITY WIDE DISTRIBUTORS AT CITY LEVEL before any goods reach small shops



    Hamain to pata hi nahi loog Pakistani bank main paisa kiyon nahi rakhte ?
    Remember that Bank story where Bank was sold for 1 rupee to Politician yeah thats why !!!
     
    Last edited: May 7, 2018
  6. !eon

    !eon SENIOR MEMBER

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    Agricultural ko tun ke rakho
    you know how many taxes already they are paying ? and why are so many leaving lands to real estate builders ?

    They are best cows to milk
     
  7. Kabira

    Kabira ELITE MEMBER

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    In any case black money in real estate does not benefit anyone. It only make houses more expensive for middle class people in cities.