According to sources, the board is considering treating all buying and selling transactions within a period of four years as a separate block of income. For the purpose, the FBR is seeking go-ahead signal from the authority concerned to add a provision for defining a transaction of sale of immoveable property as an adventure in the nature of trade as the real estate sector did not contribute anything to the national exchequer.
The sources said the real estate investors, who were involved in buying and selling of property on regular basis, were still enjoying tax holidays due to vague provisions of law. Therefore, it has been recommended to bring real estate investors in tax net in coming budget 2012-13.
Replying to a question, they said the corporate tax rate of 35 percent appeared high in comparison to the rates of 25-28 percent applicable in the region. Therefore, the authority should reduce the corporate tax to a range between 25 to 28 percent with aim at providing competitive edge in the region.
They said the reduction in corporate tax rate would not only induce corporatisation but also help the authority in broadening of tax base.
Moreover, the sources said the final tax regime, which had proved to be counter-productive for documentation of economy, had to be phased out gradually. As a first step, presumptive taxation for corporate sector should be substituted with minimum tax, allowing for unadjusted balance to be carried forward and adjusted against tax on taxable profits for subsequent years, they maintained.
They further said the net value of investments made through foreign currency got diluted due to devaluation and termed it as major obstacle in attracting foreign investments. Therefore, the foreign investments should be taxed after allowing indexation (for appreciation/depreciation) of Pakistani rupee in line with best international practices.
They said the export of services, which had great potential not to earn foreign exchange but also to generate employment within the country, should be exempted from tax or alternately be equated with export of goods.
MUHAMMAD ALI