The FBR plans to increase property valuations

The Federal Board of Revenue (FBR) in Pakistan has announced significant changes aimed at increasing tax revenues, including a substantial revision in property valuations and adjustments to tax rates across various sectors. Here are the key points from their recent decisions and the reactions they have provoked:

1. Increase in Property Valuations: The FBR plans to raise property valuations from the current 75% of market prices to 90%. This move is expected to generate an additional Rs. 30 billion in revenue. The increase will impact the calculation of withholding taxes on property transactions, affecting both filers and non-filers differently.
2. Taxation on Newspapers: There is a proposal to impose a 10% General Sales Tax (GST) on newspapers, a move criticized for potentially burdening the struggling print media industry. Senator Farooq H Naek of the PPP supported this measure, citing the need for additional government revenue.
3. Criticism from Opposition and Business Community: During a Senate Standing Committee meeting, opposition leader Senator Shibli Faraz criticized the FBR’s taxation policies, especially their impact on the salaried class. He expressed concerns about the burden on honest taxpayers and questioned the competence of the Finance Minister, Muhammad Aurangzeb, who he described as a former banker lacking economic expertise.

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1. Sector-Specific Tax Adjustments: The FBR has faced criticism from various sectors, including retail, regarding the increasing sales tax rates. Business owners argue that higher taxes on registered businesses, already paying substantial taxes, unfairly disadvantage them compared to unregistered counterparts who evade taxes.
2. Documentation Drive: Despite previous efforts to enforce documentation through CNIC requirements for large transactions, the FBR’s recent policies, such as higher sales taxes on integrated retail businesses, have been perceived as contradictory to the goal of expanding the tax base and promoting formal economy practices.
3. Challenges and Responses: The FBR defends its measures as necessary for revenue generation and argues that tax increases are essential given Pakistan’s economic challenges. They emphasize the need to address tax evasion and improve compliance to boost government revenues.

Overall, these developments highlight ongoing tensions between the FBR’s revenue generation efforts and concerns from various sectors and political quarters regarding the fairness and effectiveness of taxation policies in Pakistan.