ISLAMABAD: The government is mulling a Chinese proposal of using geo-tagging technology to conduct a nationwide survey of properties in a bid to evaluate wealth parked into the largely undocumented real estate sector, The News learnt on Tuesday.
The government already approved, in principle, a proposal by the Federal Board of Revenue (FBR) of a digital nationwide survey of properties, an official document showed.
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.
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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 going untaxed. The government offered a tax amnesty scheme recently to bring the undocumented properties into the tax net comprising 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 geo-tagging option. The revenue collecting agency was asked to take the task on priority basis.
The FBR is further considering to implementing a value-added tax (VAT) regime for businesses across the board within next four years, as the country is grappling with a challenge to improve 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 there was a widespread criticism in the business community against the new taxation model.
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.
(This news/article originally appeared in The News on November 6th, 2019)