Tax Amnesty Scheme to impact the Real Estate Market

Tax Amnesty Scheme to have a bleak impact on Property Market
President Mamnoon Hussain has issued the foreign assets declaration ordinance on Sunday that brings into effect a Tax Amnesty Scheme and it will bear down a huge impact in real estate market of Pakistan. There are substantial steps and binding reforms introduced by the government to avoid tax evasion by citizens of Pakistan and those property tax reforms include,
• The DC rates on the property will be abolished from 1st July 2018 and the purchase of property value exceeding Rs.4 Million is not possible for non-filers. Hence only filer individuals can own a property with value more than Rs.4 million after 1st July 2018.
• A maximum of 1% Tax for both (Local and Federal) has to be paid for the registration of all property types and the advance tax will be adjusted in income tax liability.
• 1% of presumptive tax is recommended for every citizen who purchases any kind of property and “this tax will become a part of their annual taxes” it stated.
• In order to avoid under-invoicing in property purchase & sale deeds, the government holds the right to buy any property that a citizen owns by paying 100% over the declared price for 2018-19, at 75% more in 2019-20 and 50% more in 2020-21.
These reforms are levied to whiten the black money injected in real estate market of Pakistan and hopefully, after the implementation of these new property reforms, there will be transparency in real estate practices & documentation. Under the amnesty scheme, every Pakistani will have to declare the unreported assets and bring it under the tax base after paying a 5% one-off penalty.
Tax Evasion is a federal crime and it is the duty of every Pakistani citizen to pay taxes and as spoken by PM Abbasi that “if we do not pay taxes, the country will not be sustainable”
If you need additional information regarding the new tax reforms imposed on property or to keep yourself updated on what degree of impact the reforms will have on the land market, them stay tuned to Apex Group.  We will make it worthwhile for you!