| In a move set to encourage overseas investment in Pakistan’s real estate sector, the Federal Board of Revenue (FBR) has announced significant tax relief for expatriates on property transactions. The decision, reported by local media, aims to provide financial ease for non-resident Pakistanis looking to invest or sell immovable properties in the country.
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The relief is granted under Clause 111AC, introduced through the Finance Act of 2022, which amends the Income Tax Ordinance of 2001. This clause exempts non-resident individuals holding a National Identity Card for Overseas Pakistanis (NICOP) or Pakistan Origin Card (POC) from the higher tax rates levied under Sections 236C and 236K of the ordinance. Importantly, these exemptions apply even if the individual is not listed on the Active Taxpayers List (ATL).
Nonresident Pakistanis must upload their NICOP or POC to the FBR’s IRIS system while submitting the general withholding tax challan to avail of the tax exemptions. The system generates a provisional Payment Slip ID (PSID) upon submission. This ID is forwarded to the Chief Commissioner Inland Revenue (CCIR) for review and verification of the applicant’s non-resident status.
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Once the verification process is completed, the tax exemption is approved, and the taxpayer is notified via SMS and email. This streamlined process ensures that expatriates can bypass higher tax rates and conduct property transactions without unnecessary financial strain.
Encouraging Overseas Investment
The initiative reflects the government’s commitment to facilitating overseas Pakistanis, whose remittances and investments are critical to the country’s economy. By removing the hurdle of elevated tax rates, the FBR aims to foster a more inclusive and welcoming environment for expatriates keen to engage in Pakistan’s booming real estate market.
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This move is expected to boost property sales and encourage long-term investments, strengthening the sector and supporting economic growth. Experts believe such measures will not only improve ease of doing business for overseas Pakistanis but also enhance Pakistan’s image as a favorable investment destination. |
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