While taking notice of the tax evasion in a large scale within Pakistan’s real estate sector, the International Monetary Fund (IMF) has demanded the government to start a stern crackdown against this practice, media reported on Tuesday.
As per the reports, the nine-member IMF delegation which is currently in Pakistan has made many demands including stern crackdown on tax evasion within Pakistan’s real estate sector as talks commence for the disbursement of a $1 billion loan instalment to Islamabad.
This requirement is part of the broader discussions focused on securing the next instalment of a total $7 billion loan program.
As per the reports, Pakistan has committed to the IMF that it will activate the Real Estate Regulatory Authority (RERA) to combat tax evasion in the real estate domain. Under this initiative, authorities plan to take stringent action against individuals who falsely report property values, imposing penalties that could include imprisonment as well as fines.
Real estate agents who neglect to register properties may face fines reaching up to Rs500,000, and those who provide misleading information could incur fines ranging from Rs200,000 to Rs500,000. Furthermore, RERA will be authorised to enforce prison sentences of up to three years for offenders.
Negotiations regarding the loan tranche are expected to persist until March 15, 2025, and will unfold in two phases: the first phase will focus on technical discussions, followed by policy-level negotiations. During this period, the IMF delegation is anticipated to engage with officials from Pakistan’s Ministry of Finance, the Federal Board of Revenue (FBR), the Power Division, and the State Bank of Pakistan.
The IMF will also receive updates regarding agricultural income taxes, taxation within the property sector, and plans to incorporate retailers into the tax system, will offer recommendations for the forthcoming fiscal year’s budget, and hold separate meetings with representatives from the provinces of Punjab, Sindh, Khyber-Pakhtunkhwa, and Balochistan.
