IMF Agree To Reduce Tax By 2% On Buying Real Estate

The government of Pakistan requested the IMF cut property taxes to boost taxes and stop outflows of dollars due to massive taxes. The government has held meetings with the NA committee and Senate committee for 2 to 3 months, and they fear many real estate developers and brokers are purchasing property abroad.   Moreover, real estate builders and developers are sending massive amounts of money abroad to purchase property, which the government cannot stop because of the massive taxes on property sales and purchases.

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Additionally, FBR and the government of Pakistan explained to the IMF multiple times they fear heavy taxes on properties purchasing or buying will have serious implications if this continues, and they will not be able to counter the outflows of foreign exchange going out of Pakistan to purchase properties due to the massive amount of taxes FBR budgeted for FY2025. FBR recently said that they want to lower taxes because they want real estate activity to kickstart again and boost the economy. Additionally, FBR wanted to lower taxes on property, but in the past, the IMF did not agree. However, according to GEO News editor Mehtab Haider, the IMF has agreed to lower the taxes on properties to the extent of a 2% WHT reduction; however, the Government of Pakistan is waiting for a written response first, as this is only for now agreed in principal terms. 

Moreover, real estate development has always dominated Pakistan's economy for both the formal and informal sectors in one way or another. Additionally, it has always been the backbone of Pakistan's economy. It is noteworthy that real estate development, sale, and purchase have always boosted taxes for the FBR and the government of Pakistan.

It is expected that the IMF will approve the 2% reduction during next month so that Pakistan can meet the tax target set by the IMF.