The Directorate General of Designated Non-Financial Business and Professions (DNFBPs) is planning raids at the business premises of developers/builders and jewelers after June 11 to conduct on-site inspections for checking compliance under the Anti-Money Laundering Act, 2010.
Talking to a group of journalists here on Monday, Muhammad Ahsan Malik, Vice President–Punjab Federation of Realtors (FoR) and General Secretary of Real Estate Consultants Association (RECA) DHA Islamabad/Rawalpindi, shared the enforcement plan of the Directorate General of DNFBPs against the real estate sector.
Pakistan’s real estate sector contributes immensely to the economy, and it is the driver of growth for the economy of Pakistan.
The recent past is witness to the fact that the introduction of harsh policy measures regarding the Real Estate sector in the FY-2018-19 and FY-2019-20 greatly affected the business activity because of which, revenues for the government from the real estate sector remained at a lower level.
On the contrary, positive policy changes in the FY-2020-21 regarding Real Estate and construction sector gave a boost to business activity and economy while increasing revenues for the government. The government needs to take some concrete and bold steps in this regard.
He stated that the DG DNFBPs has repeatedly issued notices to the developers/builders and jewelers for compliance under the Anti-Money Laundering Act, 2010.
The notices issued to all developers and builders across Pakistan included non-compliance of registration with the FBR, delay in submitting Offsite Monitoring Questionnaire, and implementation regarding provisions of Anti-Money Laundering Act, 2010 (AMLA, 2010) read with SRO 924(I)/2020 and 950(I)/2020.
“You are hereby warned to implement all the legal provisions/obligations as mentioned in AMLA, 2010 read with SRO-924(I)/2020. In future, your compliance will be checked through on-site inspections by our inspection teams against the aforementioned legal provisions at your business premises. Any default may entail imposition of sanctions as mentioned in SRO-950(I)/2020,” the FBR notice added.
From June 11, the Directorate General of DNFBPs with the workforce of Directorate General of Intelligence and Investigation Inland Revenue would conduct raids at the offices of the developers/builders and jewelers.
This would send a very negative message at the domestic and international levels and halt investment in the real estate sector.
The Federal Board of Revenue (FBR) has empowered certain officials of the Directorate General of Intelligence and Investigation Inland Revenue, Regional Tax Offices, and Model Customs Collectorates to monitor and document jewelers, accountants, and developers/builders under the Anti-Money Laundering Act, 2010 for assisting the Directorate General of Designated Non-Financial Business and Professions (DNFBPs).
The officials of the Directorate General of Intelligence and Investigation Inland Revenue, the RTOs, and the officials of the Customs at Model Customs Collectorates would assist the DG DNFBPs in performing their duties and responsibilities, Malik stated.
He informed that presently DNFBP, who are ‘Filer,’ are being harassed by FBR and are being served with notices, whereas no effort for registration of ‘Non-Filer’ is being made by FBR. Presently, Real Estate Agents, Builders, Developers, Money Changers, and Jewelers are treated under the same FBR SRO-924.
These businesses have no uniformity in their way of working. It is suggested that separate laws should be made for each category keeping in view their mode of business. The legal requirements of DNFBP should be fulfilled by the Transferring/Registration Authorities/Societies, i.e., CDA, LDA, KDA, Bahria Town, DHAs and Revenue Authorities, etc., and not by the individual Real Estate Agents, he added.
About the Real Estate Regulatory Authority (RERA), he said that we were demanding for a long time that in Pakistan, there should be some Regulator/Real Estate Council or Real Estate Management Board for Real Estate Sector.
Recently the government has passed Real Estate Regulatory Authority (RERA) Bill, 2020, from National Assembly and Senate for Capital Territory only, but still, it is not implemented.
If it is implemented, then at least 70 percent to 80 percent of issues of the Real Estate Sector will be settled. There is a dire need for the formulation of RERA and its proper implementation following the example of other developed countries. Such a step by the government will facilitate in removing different hurdles in Real Estate Sector.
Presently Sellers (Filer) are paying 1 percent gain tax at the time of transferring the property and 2 percent by the ‘Non-Filers’ it is suggested that for ‘Filer’ it should be reduced to 0.25 percent, and for Non-Filer, it should remain at 2 percent.
The maximum period for determining gain tax may be fixed at 3 years instead of 4 years, with a 5 percent (Five Percent) Flat Rate.
Reduction in the maximum period for determining Gain tax to 3 years with 5 percent (Five Percent) will enhance the Sale/Purchase activity and boost the economy, he added.