The Federal Board of Revenue (FBR) has taken a significant step to ensure tax compliance in the real estate sector. On Thursday, the FBR notified Chartered Accountant firms with a satisfactory ICAP-QCR rating to recover due taxes from real estate developers and builders. This move aims to streamline tax recovery and ensure that developers comply with the legal requirements for submitting completion certificates of real estate projects.
Notification Details
According to S.R.O. 399(l)2024 issued by the FBR, the firms of Chartered Accountants must have a valid Institute of Chartered Accountants of Pakistan (ICAP) Quality Control Review (QCR) rating of ‘satisfactory’ as of September 30, 2023, or later. This certification is essential as per the provisions of the law to facilitate the tax recovery process from developers and builders.
Legal Background
This directive is a legal requirement under section 100D of the Income Tax Ordinance, 2001. Developers are required to submit completion certificates to ensure that their projects comply with the necessary tax regulations. However, due to the FBR’s delay in notifying the list of qualified Chartered Accountant firms, many developers have faced difficulties in fulfilling this requirement.
Issues Raised by Tax Lawyer
Tax lawyer Waheed Shahzad Butt highlighted this issue to the FBR Chairman, emphasizing the severe consequences for developers unable to submit the required completion certificates. He pointed out that the FBR’s inaction was leading to significant uncertainty and financial losses for developers and businesses across Pakistan. This delay also threatened the integrity of the tax system and the National Exchequer.
Certification Requirements
For developers, the certification process involves several criteria:
- The map approving authority or NESPAK must certify that landscaping has been completed by September 30, 2023.
- A firm of Chartered Accountants with a satisfactory ICAP-QCR rating, notified by the FBR, must certify that at least 50 percent of the plots have been booked for sale.
- At least 40 percent of the sale proceeds must have been received by September 30, 2023.
- At least 50 percent of the roads must have been laid up to the sub-grade level, as certified by the approving authority of NESPAK.
Call for Action
It is imperative for the FBR to uphold its responsibilities and take proactive measures to address this issue promptly. Timely notification of the list of qualified Chartered Accountant firms is crucial to facilitate developers in complying with the legal requirements and avoiding unnecessary hardships.
Conclusion
Makani Marketing urges the FBR to expedite the notification process and ensure smooth tax recovery from real estate developers. By doing so, the FBR can help maintain the integrity of the tax system and support the real estate sector in meeting its legal obligations.
