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New law likely for 4% capital value tax on immovable property - LahoreEstate - 06-15-2009 04:52 AM
* FBR chairman says property transactions not to be recognised until payment of CVT
By Sajid Chaudhry
ISLAMABAD: The government is planning to bring in a new law to restrict the transfer of immoveable property without the payment of a 4 percent capital value tax (CVT) in all four provinces.
The government would declare transfer of immoveable property legal only after the receipt of the CVT, to ensure strict compliance with the CVT regime for immoveable property transfers in 2009-10. Addressing the media for the first time since his appointment, Federal Board of Revenue Chairman (FBR) Sohail Ahmed – on the conclusion of a post-budget media briefing at the Planning Commission – said the 4 percent CVT on property was a kind of capital gains tax (CGT) on real estate. He said CVT had not been properly collected at the provincial level even at the precious rate of 2 percent. “There is a need for legal backing to ensure the payment of CVT before the transfer of property,” he said, adding that the government was planning to introduce the new law to deal with the prevailing situation. The chairman said the property transaction would not be recognised until the payment of CVT. Replying to a question, Sohail said that the tax reform was a complex issue, and administrative restructuring would continue under the agenda. He said that the pillar of the reform was the integration of taxes – which would be instrumental in the exchange of data to verify payments by taxpayers in the sales and income tax departments.
The CBR chairman said that taxation measures amounting to Rs 69-70 billion had been taken in the budget for 2009-2010. The official said the customs computerised clearance system would be upgraded, and the FBR would also improve its capacity to “indigenously implement our own systems”. “If we improve our capacity, the FBR would not be dependent on foreign customs clearance systems.” He also said that the audit policy had been changed “in view of complaints related to harassment”. Previously, audits were conducted for records of business operations spread over four-five years, but businessmen had been criticising this practice. “Now, it has been decided that the audit would be conducted for records of a business’ operations over the last year. In case a major discrepancy is detected or a data mismatch, the department has the legal authority to scrutinise record for previous years.
The FBR would select four-five percent of the total cases under the computerised audit system for verification of data. For this purpose, the FBR has also asked chambers and federations to voluntary step forward and point out cases of tax evasion,” said the chairman.
He said the FBR would also hire external tax auditors from the Institute of Chartered Accountants of Pakistan (ICAP) for third-party audits. He said the government was taking steps to check under-invoicing, especially at the import stage.
http://www.dailytimes.com.pk/default.asp?page=2009\06\15\story_15-6-2009_pg7_34