ISLAMABAD – The Securities and Exchange Commission of Pakistan (SECP) has successfully securing concessional rates of stamp duty and registration fee for Real Estate Investment Trust properties in Punjab and Sindh.
In Punjab the stamp duty on REIT property purchases has been reduced from two percent to 0.5 percent. On REIT property sales the duty has been cut from two percent to one percent. In Sindh, the stamp duty on purchases has been reduced from three percent to 0.5 percent and on sales it has been brought down from three percent to one percent.
In both provinces, the registration free on purchases has been completely waived on sales and it has been reduced from one percent to 0.5 percent on sale. The SECP has been vigorously pursuing the cause of reduction of duties and taxes on REITs properties since introduction of its regulatory framework in 2008. It may be recalled that under the Income Tax Ordinance, REITs already enjoy tax-pass-through status upon distribution of at least 90 percent profits among their unit holders.
In addition, property sellers have also been provided substantial tax incentives under the tax laws. It is expected that the friendly tax regime in tandem with a recent improvement in the regulatory framework would provide necessary impetus for the launch of REITs in Pakistan.
These measures are likely to encourage transparency in deals and better price mechanism in the real estate market which would ultimately lead to increase in overall revenue of respective governments and land authorities.
