ExPats Tax Policy Real Estate Pakistan
In this article we will comprehensively discuss Expats Tax policy real estate in Pakistan in the year 2017. If you are reading this and you know some Expats who are confused about the latest Tax policy please share it with them. There is a lot of confusions about latest taxes unfortunately because of the lack of professionalism within the real estate industry. We will also educate you how and why it will not effect Expats and how you can save yourself from unnecessary taxation.
Common Mistakes Made By Expats
Some of the common mistakes made by Expats while doing financial transaction within Pakistan are :
- Expats usually do not file Tax return in Pakistan.
- When they buy property or any other asset, they pay higher taxes as per non-filer.
- They pay Fed tax when withdrawing money from the Bank.
Advantages Of Filing Tax Returns For Expats
There are a number of advantages if you want to become a Tax Filer in Pakistan and it can save you Hundreds and thousands of your precious hard earned money. If you are confused about how to File it contact us and we will help you do the needful.
No Income Tax on Foreign Remittance
If you are living and earning abroad you are not liable to pay any income tax in Pakistan. This is only for the money you earn in another country, any incomes you earn here in Pakistan including rental incomes are liable to income tax. This means that you can bring any amount of money inside Pakistan without paying a single penny as Tax. However whatever you earn from this money when it is in Pakistan it is liable to Taxes. Expats can therefore register themselves as Filers if they start filing Tax returns in Pakistan.
Expats Can File Zero Tax Returns
If you are an Expat and your entire income is based in another country , you can file zero tax return. This will make you a Filer and you will be saved from all the unnecessary Taxes in Pakistan.
Expats Pay Zero Fed Duty When withdrawing Money
Declaring yourself as a Filer will also save from Fed Tax when withdrawing money from the Bank. This is one hidden Tax which can cost you a lot just to give you an idea you can save roughly 90000 PKR on a transaction of 20 Million PKR.
Only Pay 2% Advance Tax While Buying
If you are an Expat and a Filer you will only have to pay 2% advance tax while purchasing a property . This will again save you a lot of money as an example if you purchase a Plot in DHA Lahore Phase 8 with a FBR value of 630000 , you are only liable to pay 126000 PKR instead of 252000 PKR if you are a Filer. In addition to this even the 2% you pay as advance Tax is also refundable when you file your annual Tax returns. I do agree that the refund is very hard to claim in Pakistan but remember it is not impossible.
Only Pay 1% Advance Tax While Selling
You will also get Tax relief when you sell the property and pay only 1% of FBR value as advance tax. This 1% Tax will be adjusted in your CGT in the annual income Tax return.
No CGT If You Sell After 3 Years
This policy is related to both Expats and local investors. However it is more relevant to Expats as they usually make long term investment in property. It is practically not feasible for an Expat to buy property for short term trade. In most cases of investment by Expats the holding period of property is more than 3 years. If you are an Expat and you are buying a property for more than 3 years CGT is not some thing you should worry about.
Cost of Filing Tax
It will cost you only 10000 PKR as your Lawyers fee who will submit your first tax return. For the ease of our clients we have arranged an in house solution to help you do the needful. It only takes a maximum of 7 days to register as a Tax filer.
Contact us if you are interested to File Tax return and save your money when buying or selling property in Pakistan.
I hope that this post will help you to clarify most of the doubts regarding the latest Taxes in Pakistan. All the information provided here is approved and in consultation with our Tax lawyers and FBR notifications. It is also imperative to mention that confusions related to Taxation on real estate are because of the lack of awareness rather than Taxes themselves. Pakistan is moving towards a new Phase where you need to regulate your financial income resources and pay valid Taxes. Most of the Expats do understand the importance of Taxes in a development of the country and is not a new thing for them.
I wish you all good luck and a lot of money saved when you do your next real estate transaction in Pakistan.
You can also discuss further at our Discussion Forum. We also recommend following articles for understanding Expats Tax policy Real Estate in Pakistan.
CEO & Investment Consultant at Imlaak
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