After June 11, the Directorate General of Designated Non-Financial Businesses and Professions (DNFBPs) intends to raid the business premises of developers/builders and jewellers to perform on-site inspections to ensure compliance with the Anti-Money Laundering Act, 2010.
Muhammad Ahsan Malik, Vice President–Punjab Federation of Realtors (FoR) and General Secretary of Real Estate Consultants Association (RECA) DHA Islamabad/Rawalpindi, revealed the Directorate General of DNFBPs’ enforcement plan against the real estate sector with a group of journalists here on Monday.
Pakistan’s real estate sector contributes significantly to the economy and is the primary driver of growth.
Recent history demonstrates that the introduction of tough policy measures affecting the real estate industry in FY-2018-19 and FY-2019-20 had a significant impact on economic activity, resulting in decreased government revenues from the real estate sector.
On the contrary, positive policy reforms in the Real Estate and construction sectors during FY-2020-21 boosted company activity and the economy while raising government revenue. The administration must take some decisive and audacious actions in this direction.
He noted that the DG DNFBPs has regularly given letters to developers/builders and jewellers on their compliance with the 2010 Anti-Money Laundering Act.
The notices were given to all developers and builders in Pakistan for non-compliance with the FBR’s registration requirements, late submission of the Offsite Monitoring Questionnaire, and implementation of the Anti-Money Laundering Act, 2010 (AMLA, 2010) read with SRO 924(I)/2020 and 950(I)/2020.
“You are hereby advised to comply with all legal provisions/obligations set forth in AMLA, 2010 read in conjunction with SRO-924(I)/2020. In the future, our inspection teams will conduct on-site inspections of your business premises to ensure compliance with the aforementioned legal standards. Any breach may result in the application of fines in accordance with SRO-950(I)/2020,” the FBR notice added.
From June 11, the Directorate General of DNFBPs will conduct searches at the offices of developers/builders and jewellers with the assistance of the Directorate General of Intelligence and Investigation Inland Revenue.
This would convey a very unfavourable message both domestically and internationally, thereby halting real estate investment.
Under the Anti-Money Laundering Act, 2010, 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 jewellers, accountants, and developers/builders for assisting the Directorate General of Designated Non-Financial Business and Professions (DNFBPs).
Malik claimed that personnel from the Directorate General of Intelligence and Investigation, the RTOs, and Customs at Model Customs Collectorates would support the DG DNFBPs in carrying out their duties and responsibilities.
He stated that DNFBP, as a ‘Filer,’ is currently being hounded by FBR and served with notices, but FBR makes no attempt to register ‘Non-Filers.’ At the moment, Real Estate Agents, Builders, Developers, Money Changers, and Jewelers are all subject to the same FBR SRO-924.
These businesses operate in a non-standardized manner. It is proposed that distinct laws be enacted for each group based on their style of operation. The DNFBP’s legal requirements should be met by the Transferring/Registration Authorities/Societies, i.e., CDA, LDA, KDA, Bahria Town, DHAs, and Revenue Authorities, etc., he noted.
Concerning the Real Estate Regulatory Authority (RERA), he stated that we have been advocating for a long time for the establishment of a regulator/real estate council or real estate management board for the real estate sector in Pakistan.
Recently, the government approved the Real Estate Regulatory Authority (RERA) Bill, 2020, via the National Assembly and Senate, but it has not yet been implemented.
If executed, it will resolve at least 70% to 80% of the Real Estate Sector’s concerns. There is an urgent need to improve RERA and to implement it properly, following the lead of other developed countries. The government’s action will aid in the removal of various impediments in the real estate sector.
Currently, Sellers (Filers) pay a 1% gain tax at the time of property transfer, while Non-Filers pay a 2% gain tax. It is proposed that Sellers (Filers) pay a 0.25 percent gain tax, while Non-Filers pay a 2% gain tax.
The maximum time for calculating gain tax may be reduced to three years rather than four years, at a flat rate of 5% (Five Percent).
The reduction of the maximum period for calculating gain tax to three years at a rate of 5% (Five Percent) will stimulate sales and purchases and strengthen the economy, he noted.