The Securities and Exchange Commission of Pakistan (SECP) has successfully secured concessional rates of stamp duty and registration fee for real estate investment trust (REIT) properties in Punjab and Sindh. According to a press release, in Punjab the stamp duty on REIT property purchases has been reduced from 2 percent to 0.5 percent. On REIT property sales the duty has been cut from 2 percent to 1 percent.
In Sindh, the stamp duty on purchases has been reduced from 3 percent to 0.5 percent and on sales it has been brought down from 3 percent to 1 percent. In both provinces, the registration free on purchases has been completely waived on sales and it has been reduced from 1 percent to 0.5 percent on sales.
The SECP has been vigorously pursuing the cause of reduction of duties and taxes on REIT properties since introduction of its regulatory framework in 2008. 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, the sellers of property have also been provided substantial tax incentives under the tax laws.
"We expect that the friendly tax regime coupled with recent improvement in the regulatory framework would provide necessary impetus for the launch of REITs in Pakistan", the SECP said. 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, it added.-PR
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