'Nothing forced': Miftah vows to bring real estate brokers, builders into tax net

Published June 25, 2022
Federal Minister for Finance and Revenue Miftah Ismail speaks during an interview with Reuters at his office, in Islamabad, June 11. — Reuters/File
Federal Minister for Finance and Revenue Miftah Ismail speaks during an interview with Reuters at his office, in Islamabad, June 11. — Reuters/File

Finance Minister Miftah Ismail on Saturday promised that the government was working on bringing restaurants, builders and real estate brokers into the tax net "with consultation" within the next few months.

In response to a tweet over letting small traders and retailers go with a fixed monthly tax, Ismail said that he could only "fight so many battles".

"We are bringing in (gently) millions of shops into the tax net. I have brought jewellers into the net, and rest assured I will bring in all the professionals you mentioned in the net over the next few months," he tweeted.

The minister said that he had talked to associations of small shopkeepers and jewellers to bring them into the net and "did so with their agreement".

"Now I will bring in real estate brokers, builders, housing society developers, car dealers, restaurants, salons, etc., in the net. But nothing forced. With consultation," he added.

Ismail's tweet was followed up by one by Salman Sufi, the prime minister's adviser on reforms, in which he confirmed that real estate, builders, housing society developers "and more" were next on Prime Minister Sharif's bid to broaden the tax net. "Gradually and with consultation of their representatives with Miftah Ismail," he added.

Yesterday, the government unveiled new tax measures for both industries and individuals. Addressing a National Assembly session convened to wind up the budget debate, Ismail said that a new fixed tax scheme on shops outside of the tax net under which a small shop owner will pay a fixed tax of Rs3,000 and big retailers Rs10,000 per month.

Will super tax help Pakistan’s economy?.

The retailers dealing in gold and had shops of 300 square feet or less would have to pay a fixed income and sales tax of Rs40,000, which was reduced from Rs50,000. For bigger shops, the sales tax had been reduced from 17pc to 3pc.

The withholding tax on gold sold by individuals to goldsmiths has been reduced from 4pc to 1pc. A similar scheme of fixed tax will be announced for realtors, builders and car dealers.

Separately on Friday, Prime Minister Shehbaz addressed the nation and announced a 10pc “super tax” on large-scale industries in a bid to shore up revenues for supporting the country’s poor amid rising inflation.

Read more: Super tax — What the state giveth, the state taketh away

The 13 industries to be taxed include cement, steel, sugar, oil and gas, fertilisers, LNG terminals, textile, banking, automobile, cigarettes, beverages, chemicals and airlines.

The PM said these sectors had earned significant profits this year. Entities in the rest of the sectors will have to pay this one-time additional tax at the rate of 1pc to 4pc on their income.

The super tax, the finance minister later clarified, was a “one-time tax needed to curtail the previous four record budget deficits”.

The announcement had come amid hopes that the country would soon clinch an agreement to unlock a new tranche of funds from the International Monetary Fund (IMF), which were needed to avert a balance-of-payments crisis.

Meanwhile, a Dawn editorial on Saturday said: "The super tax will significantly squeeze the profits of companies coming under the super tax and many of them are likely to hold their future investment plans and discourage documentation."

It highlighted that the steps taken by the government were reflective of the "extremely sorry state" of Pakistan's economic affairs.

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