ISLAMABAD - The Association of Builders and Developers of Pakistan (ABAD) has expressed serious concerns over the reported move of the Federal Bureau of Revenue (FBR) to abolish Fixed Tax Regime (FTR) for builders and developers.
“Abolishing Fixed Tax Regime (FTR) for builders and developers will open the gates of corruption, which is not anyway in the interests of businessmen and the country itself,” said ABAD Chairman Mohsin Sheikhani while addressing a press conference. He said that members of ABAD have deposited Rs150 million as 5 percent advance tax under the FTR during last four months of current fiscal year, which reflects a total FTR of Rs3 billion, while the ABAD had committed to FBR that this sector will pay Rs2 to Rs3 billion of the tax.
“We have also said last year that the construction sector is paying almost Rs80 million of minimum tax, which will be increased ten times if a corruption free Fixed Tax Regime implemented for builders and developers. But before this new mechanism could start working, the FBR brought the issue of new property valuation virtually blocking the way of new construction for almost six months,” he added.
“The real estate sector has paid total taxes of Rs 18.50 billion under various sections of Income Tax Ordinance including section 7-C, 7-D, 236-C, 236-K and 236-W. Moreover, we expect more Rs4 billion tax collection form this sector during last one month and ten days of current fiscal year, which will bring to a total collection of Rs22.50 billion. Thus you can judge how much this sector is contributing to the national kitty,” he added.
On the other hand, it is the fact that members of ABAD are involved in 25 percent of all construction activities of the country while other players are responsible for 75 percent construction throughout the country. He said that members of ABAD are more than willing to pay taxes and the government should give chance to FTR for at least three years instead of taking any decision on the basis of four months. The FBR should not press only ABAD members to realise tax target but also put its own mechanism to get advance tax from other people all over country who are going to construct a building or a house, he added.
He said that the government accepted only two suggestions of ABAD for current fiscal year instead of four suggestions of the association. Had the government accepted all four suggestions, tax collection could have been far better, he lamented.
Coming to the Low Cost Social Housing, being built by ABAD, Mohsin said that at present Pakistan is facing a shortage of 12 million houses. 0.25 million housing units are added into this shortage every year. He said, “If we only count on shortage of houses, it is $180 billion industry with nominal price of Rs1.5 million to Rs1.9 million of each house depending on location and price of the land. He further said the construction industry is providing 2.6 million jobs and if given incentives it could go up to 5 million and jobs will also enhance in more than 72 allied industries.
The ABAD has announced a social project in Islamabad which will be launched soon, he said. “We are going to built this project with our own resources but we would like to ask the government to provide free of cost documentation and utilities and facility of ‘one window’ for approval etc for the benefit of general public.”