{"id":115597,"date":"2021-11-03T12:53:01","date_gmt":"2021-11-03T12:53:01","guid":{"rendered":"https:\/\/www.zameen.com\/blog\/?p=115597"},"modified":"2021-11-03T12:53:07","modified_gmt":"2021-11-03T12:53:07","slug":"incentives-real-estate-investors-pakistan","status":"publish","type":"post","link":"https:\/\/www.zameen.com\/blog\/incentives-real-estate-investors-pakistan.html","title":{"rendered":"Great Incentives For Real Estate Builders And Investors In Pakistan"},"content":{"rendered":"\n

For long-term investments, real estate is one of the safest options because of the stability of the market and demand for residential and commercial units. In Pakistan, too, investing in real estate is the most followed trend and the rising demand of units in the country has welcomed many new players in the industry. In a seminar titled \u201cConstruction and Housing For Sustainable Development\u201d held in Dubai, Secretary Board of Investment (BOI) Fareena Mazhar encouraged investors to explore the housing industry of Pakistan. There were a few opportunities and incentives for real estate investors that were also discussed during the seminar and this is a summary of all those points.<\/p>\n\n\n\n

Incentives For Real Estate Investors In Pakistan<\/strong><\/h2>\n\n\n\n
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Pakistan is facing a deficit of housing units<\/figcaption><\/figure>\n\n\n\n

In the past few years, a lot of investments in different sectors have been made by local and foreign investors. The incumbent government of Prime Minister Imran Khan is focused on making economic reforms, policy changes and incentivizing different sectors for economic uplift. These initiatives have definitely helped in bringing new investments in the country and encouraged new players in all the industries.<\/p>\n\n\n\n

Similarly, the government has also encouraged builders, developers and investors to come forward with new projects. As told by Secretary BOI Fareena Mazhar, the current annual demand of housing units in Pakistan is about 700,000 and only half of this is being met. The deficit of housing units and commercial buildings in the country is an opportunity for existing builders, developers and investors to increase their investment for higher returns and new players to explore this sector and diversify their portfolio.<\/p>\n\n\n\n

The seminar was attended by many investors who were also informed about the tax-based rebates offered to the construction industry in Pakistan. Let\u2019s take a detailed look at the opportunities and incentives for real estate investors in the country that were discussed during the seminar.<\/p>\n\n\n\n

Exemption From Withholding Taxes<\/strong><\/h3>\n\n\n\n

The BOI secretary while addressing the seminar pointed out the fact that an amendment in the Tax Ordinance has been made specifically to declare the construction industry of Pakistan as an industrial undertaking. Through this amendment, the industry has become eligible for benefits, incentives and concessions which are available to other industries.<\/p>\n\n\n\n

The exemption from withholding tax can be availed by all eligible builders and developers on the purchase of building materials used in construction. The provisions of sections 150 and 153 of the Income Tax Ordinance shall not apply to builders and developers on the purchase of building materials except cement and steel. It also states that apart from the services provided by companies, withholding tax shall not be applied to services of plumbing, shuttering, electrification and other similar services.<\/p>\n\n\n\n

The dividend income paid by a builder or developer company out of the profits from a project to a person shall also be exempted from tax and other tax withholding obligations. <\/p>\n\n\n\n

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Builders and developers have tax exemption on the purchase of building materials<\/figcaption><\/figure>\n\n\n\n

Tax Payable On Income And Profits<\/strong><\/h3>\n\n\n\n

The federal government has introduced the Naya Pakistan Housing Scheme<\/a> under which low-cost housing units are being developed across the country for everyone who can own a home. The government is offering these housing units at subsidized rates through bank financing at easy monthly instalments. Builders and developers who are working on projects under the Naya Pakistan Housing and Development Authority (NAPHDA) or Ehsaas Programme<\/a> will be eligible for a big slash of 90% on the tax payable on their income and profits.<\/p>\n\n\n\n

These projects are being developed on both government and private land. Models for both types of developments differ in terms of conditions that are specified by the NAPHDA. However, facilities and incentives for both projects remain the same which are:<\/p>\n\n\n\n