Islamabad, Nov 1: Capital Realtors Criticize Increase in Property Valuation. Property developers in Islamabad have voiced serious concerns over the Federal Board of Revenue’s decision to raise property assessment rates in 56 cities starting on November 1, 2024.
The aforementioned revision is expected to negatively affect Pakistan’s real estate market and may even trigger additional capital flight, according to Sardar Yasir Ilyas Khan, the president of the Islamabad Developer Association and a former president of the Islamabad Chamber of Commerce and Industries. It’s important to remember that the real estate sector drives about 60 related industries, and this choice could have serious repercussions for them as well.
Although the goal of this action may be to appease the International Monetary Fund (IMF) and lower the fiscal deficit, which is currently at a worrying 6% of Pakistan’s GDP, or Rs. 7 trillion, he underlined that consultation with the business community is crucial before making such important decisions.
Instead than placing more taxes on people who are already subject to a number of taxes, one possible answer would be to broaden and diversify the tax base. “Involving all stakeholders is essential when making decisions that have a direct impact on the business environment,” he said. “We warn the government that these measures may have extremely detrimental effects on companies and could cause an already precarious economic situation to become unstable.”
Maintaining company confidence in the face of policy changes is crucial. Because nations like the UAE, Singapore, Hong Kong, and Malaysia offer lower tax rates and better returns on real estate investments, Pakistan’s real estate tax policy has had a detrimental effect and caused capital flight. According to him, Pakistani investors have contributed USD 11 billion to the Dubai real estate market, making them the second-largest group of investors in the United Arab Emirates.
Additionally, outstanding sales tax adjustment reimbursements of billions of rupees have caused a substantial confidence deficit between the business community and the Federal Board of Revenue (FBR). Furthermore, levying double taxes on non-filers and late filers serves as a disincentive to join the tax system.
According to the business community, maintaining communication with the FBR is crucial to finding a balance between meeting income goals and guaranteeing the real estate industry’s continued stability and growth.
