Expats purchasing property for business to be taxed

ISLAMABAD: While the PTI government has announced that non-filer overseas Pakistanis will be allowed to purchase property and cars in Pakistan and ban on other non-filers will not be lifted, the prime minister’s spokesman says expatriates purchasing property for business purposes will also be brought in the tax net.

“FBR will be continuously monitoring the business transactions, and if any overseas Pakistanis or those using National Identity Card for Overseas Pakistanis (NICOP) will be purchasing property or vehicles for the business purposes they will also be brought in the tax net,” Iftikhar Durrani, Special Assistant to the Prime Minister on Media, told The News. Responding to a question that people can manage to make NICOP while living here in Pakistan in order to carry out many business transactions, Durrani said the FIA and FBR will be monitoring all such transactions and anyone doing business transactions will be brought in the tax net.

Durrani said overseas Pakistanis should be welcomed if they want to come to Pakistan or to purchase property here. He said overseas Pakistanis were being allowed to purchase property or vehicles but if someone amongst them will be doing property business he will be brought in the tax net ultimately. However, this very point is not clear in the government plan to give exemption to non-filer here or non-filer overseas Pakistanis.

Under tax laws, any income earned from abroad is exempted from tax. There is no question or debate on imposing any taxes on the income earned by overseas Pakistanis as the money sent by them to Pakistan contribute largely to national economy in form of foreign remittances.

Overseas Pakistanis can send money to their home using banking channels and now they can also buy property and vehicles without paying any extra taxes even if they are non-filers. The issue is about bringing into tax net those expats who purchase more than one property here for the business purposes.

The other issue is about those Pakistanis who will manage to get NICOP once and will continue doing property business while living here and by enjoying this exemption using NICOP. Such NICOP holders, according to many studies, use to travel abroad frequently that too for the business purposes, and make it an excuse of their being out of the tax net.

According to tax experts, the online system of FBR for filing returns provides a tab for overseas Pakistanis where they can make their declarations showing income and taxes paid as ‘NIL’ and can become ‘filers’.

By using this tab, they will not have to pay any taxes on the money they earned or sent to Pakistan and will also get a status of ‘filer’. When no one is asking to impose any kind of taxes on overseas Pakistanis and everyone supports encouraging and facilitating Pakistanis living abroad, it is incomprehensible as to why the PTI government is hesitant to include overseas Pakistanis in the tax record registration system by asking them to file their annual returns and become filers.

If overseas Pakistanis who want to make investments in Pakistan will also start filing returns, the FBR record will have details of their properties in Pakistan and if they will be doing business, i.e. purchasing and selling their properties, they will be paying taxes.

Discussion with different overseas Pakistanis show that as a matter of fact they don’t have any problem in paying applicable taxes for purchasing properties or in becoming ‘filers’ as it will help them in many ways.

The problem in the whole issue is about facilitating those strong people in the property and other businesses through this exemption who were doing their best to get this exemption so they can continue their business ventures by living out of the tax net and by posing them as overseas Pakistanis by showing NICOP or proving that they are non-residents as their stay in Pakistan was less than 183 days.