ISLAMABAD: The Association of Builders and Developers of Pakistan (ABAD) expressed concerns on Tuesday about the reported move of the Federal Board of Revenue (FBR) to abolish the fixed tax regime (FTR), saying it will hurt the construction industry and promote corruption.

Addressing a press conference, ABAD Chairman Mohsin Sheikhani demanded that the government should increase the deputy commissioner (DC) and FBR rates to the market rates. He added that the tax rate for the realty sector should be one per cent only.

“This way, higher taxes will be recovered and the harassment faced by the business community will end too,” he added.

He said ABAD members deposited Rs150 million as 5pc advance tax under the FTR in the last four months of the current fiscal year, which reflects a total FTR of Rs3 billion.

He said almost 10 months were lost due to tax rate disputes between the government and the realty sector.

“ABAD had committed to the FBR at the start of the current fiscal year that the sector would pay Rs2-3bn in taxes if the FTR was introduced. Now we have fulfilled our commitment,” he said.

“The government was earlier bagging only Rs120m under this head. The beneficiaries of the previous system want to end the FTR now,” he added.

The construction sector is paying almost Rs80m in minimum tax, which will increase 10 times if a corruption-free FTR is implemented, he said.

He noted the real estate sector paid total taxes of Rs18.50bn under various sections of the Income Tax Ordinance during the current fiscal year.

ABAD members were involved in 25pc of all construction activities in the country, he told journalists.

“ABAD members want to pay taxes. Instead of taking a decision in haste, the government should give the FTR a chance for at least three years,” the ABAD chairman said.

Pakistan faces a shortage of 12m houses. Almost 54pc of Karachi’s population lives in slums or irregular housing colonies. Similar conditions are visible across the country, Mr Sheikhani said.

He said income tax officials have created an atmosphere of fear for builders by raiding their offices in Karachi in recent months. The practice has stopped now due to the efforts of ABAD, he said, adding that the tax officials have yet to return records that they seized during those raids.

Published in Dawn, May 24th, 2017