The finance ministry is ambiguous over a budget proposal to abolish 25pc dividend income tax rate on real estate investors, suspecting that the move is geared towards providing relief to a company owned by Arif Habib Group, sources in the ministry are reported to have stated.
It appears that the opinion is divided over tax budget proposals between the finance ministry and the Federal Board of Revenue (FBR) headquarters.
As per the sources, Secretary Finance Tariq Bajwa chairing the first formal meeting to review the tax measures prepared by the FBR questioned the FBR’s proposal to do away with the 25pc dividend tax on incomes of Real Estate Investment Trusts (REITs).
Bajwa feared that the proposal tabled is in favour of Dolmen City REIT, a listed company on the Pakistan Stock Exchange (PSX) owned by Arif Habib who had shown discontent over 25pc dividends tax.
It is pertinent to mention that this is the first time during the ongoing budget drafting exercise that a presentation on taxation measures was shared with anybody not belonging to the FBR headquarters
The meeting took place on Saturday in Q-Block, the seat of the finance ministry. The FBR Chairman Dr Mohammad Irshad who also holds the position of secretary revenue division was not present at the meeting. Moreover, Special Assistant to Prime Minister on Revenue Haroon Akhtar Khan was also not present at the meeting, highlighting the FBR headquarters’ dissatisfaction with the decision to extend primary role to secretary finance in taxation related matters.
During the discussion on tax measures, Bajwa was backed by the FBR member tax policy Dr Mohammad Iqbal and Special Assistant to FBR Chairman Amjad Zubair Tiwana.
Sources have confirmed that the FBR headquarters will not let go off a proposal as per the decision of finance secretary asserting that final authority lies with the Finance Minister Ishaq Dar.
Dar has assigned the responsibility of scrutinising tax proposals to Bajwa while he is busy with foreign engagements. Dar will be reviewing the budget proposals but he wanted Bajwa to go through the taxation measures proposed by the FBR.
As per the sources, the secretary finance, also FBR’s former chairman, in taxation matters was also involved besides Ishaq Dar in talks with the International Monetary Fund (IMF), held last month. The incumbent government had attracted criticism since the first budget has been prepared solely by bureaucrats.
