ISLAMABAD: In a bid to document the undocumented real estate sector the government is mulling a Chinese proposal of using geo-tagging to carry out a nationwide survey of properties to evaluate the wealth parked into the sector, according to media.
A document obtained by media shows that the government has already approved the Federal Board of Revenue’s (FBR) proposal of a digital nationwide survey of properties.
The digital survey along with geo-tagging needs to be undertaken over the next two years to assess and tap colossal wealth parked in the real estate sector over the next two years, the document said.
There is no accurate estimate of investment involved in the domestic real estate sector, but a conservative estimate puts it at billions of dollars with most of them being untaxed.
The government had recently offered a tax amnesty scheme to bring the undocumented properties into the tax net which comprises less than 2.5 million of return filers.
The FBR was advised to keep the Chinese proposal for the survey under consideration. China had proposed the government for conducting digitised land survey (digital cartography) of entire country two years back.
The FBR is further considering a proposal for proof of concept of digital survey of Islamabad industrial area along with a geo-tagging option. The revenue collecting agency has been tasked to do it on a priority basis.
The FBR is further considering implementing a value-added tax (VAT) regime for businesses across the board within next four years. the move comes as the country grapples with the challenge of improving tax-to-GDP ratio and bring a gigantic undocumented economy into the net.
The FBR is to fully implement VAT regime for all business segments over next two to four years, the official document revealed.
FBR said there is a need to phase out the existing general sales tax system and gradually implement VAT regime to enhance revenues, broaden tax base and assist in documentation of the economy.
The VAT proposal had been put on a back burner in the past as it was widely criticised by the business community.
The international financial institutions called for removal of double taxation system – a key barrier to mobilise revenue and improve tax-to-GDP ratio, which is one of the lowest in the emerging economies.
“The challenge for Pakistan is to generate considerably more revenue by developing a modern tax system without penalising economic growth or exacerbating income inequality,” the International Monetary Fund said in a report.