Amend­ment re­quired in tax­a­tion regime

Pakistan Observer - - ECONOMY WATCH - KHAN

AMANULLAH KARACHI—Arif Habib Chair­man Arif Habib Group has said that the amend­ments re­quired in the tax­a­tion regime af­fect­ing Real Es­tate In­vest­ment Trusts (REITs). He said, “REIT is a new con­cept in Pak­istan that needs a sta­ble and en­abling tax­a­tion en­vi­ron­ment to de­velop. Through the gov­ern­ment’s sup­port both at the fed­eral and pro­vin­cial lev­els along with SECP’s guid­ance, Arif Habib Group held a pre­bud­get me­dia brief­ing to dis­cuss the di­rect and in­di­rect im­por­tance of REITs for the econ­omy at the Arif Habib Cen­tre on Tues­day.

Arif Habib, Chair­man, Arif Habib Group while ad­dress­ing the me­dia said, “Through this ses­sion, we seek to dis­cuss we were able to launch South Asia’s first listed REIT in the last fis­cal year. How­ever, shortly af­ter the launch, the Fi­nance Act 2015 made two changes, which hin­der the launch of new REIT schemes. These changes need to be re­versed and in­cen­tives to REITs should be re­stored”.

He fur­ther said, “REITs will lead to doc­u­mented real es­tate trans­ac­tions and non- spec­u­la­tive growth of the real es­tate sec­tor. REITs will pro­vide small in­vestors with a se­cure and liq­uid in­vest­ment av­enue, cre­at­ing em­ploy­ment and growth op­por­tu­ni­ties in over thirty sec­tors. It will also boost lo­cal and for­eign in­vest­ment con­fi­dence as trans­parency mech­a­nisms are set in place.” The brief­ing cov­ered a num­ber of ar­eas com­menc­ing with an over­view on the po­ten­tial and need of the Con­struc­tion and Hous­ing sec­tor fol­lowed by a sum­mary of the changes made in the tax law by the Gov­ern­ment through the Fi­nance Act 2015.

The ses­sion con­cluded with an out­line of the rec­om­men­da­tions pre­sented to the Gov­ern­ment for con­sid­er­a­tion in the up­com­ing bud­get. These in­cluded re­in­stat­ing Cap­i­tal Gains Tax Ex­emp­tion on Sale of Prop­erty to all types of REITs as was avail­able till June 2015 (as per Sec­tion 99A of the Sec­ond Sched­ule of the In­come Tax Or­di­nance, 2001) and re­clas­si­fi­ca­tion of In­vest­ment in REIT units as in­vest­ment in Stock Fund, which are cur­rently be­ing in­cor­rectly clas­si­fied with Money Mar­ket or Fixed In­come Fund (as per the Sec­ond Pro­viso of Part I-Divi­sion III of the First Sched­ule ITO, 2001).

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