FBR Registration for Property Dealers: Why Is It Important?

FBR registration for property dealers is a necessary step to take in order to regulate the real estate business and avoid illegal activities. The first ordinance was proposed in 1980, that states that any person who wants to do business in real estate should be registered with the authority.

In the last few decades, many irregular transactions happened that led to money laundering and terrorism. There was a need to purpose strategies that could combat corruption.

State Bank New Ordinance 2021

For the development of the real estate sector, the state bank has taken several steps. State bank amended the capital adequacy regulations and lowered the risk weight from 200% to 100% on banks and DFIs’ (developmental finance institution) investments in the units of REITs (real estate investment trusts). It will help banks to invest openly in real estate sectors to encourage companies to start new projects that will, in return, boost up governments’ strategies for housing development. State bank new ordinance 2021 also helped to maintain money transactions.

Anti-money Laundering and combating the Financing of Terrorism

Whenever there are illegal transactions of money, the country’s security is at risk. Foreign enemies that aid terrorists by facilitating them mostly do this. As soon as the PTI government took charge, Prime Minister Imran Khan focused mainly on this and made it compulsory to report every transaction. Two institutions such as FBR (Federal Board of Revenue) and FATF (Financial Action Task Force), are responsible for FBR registration for property dealers.

Importance of FBR Registration for Property Dealers

Registration is important because FBR plans to determine and regulate real estate and financial transactions. Flipping real estate is one of the most prevalent ways for fraudsters to launder money in an untraceable manner. These deals usually involve large quantities of money.

The government has been working on legislation to monitor, trace, and regulate these types of transactions. Authorities are working to modernize the system to make it easier to crack down on unlawful real estate transactions. If a person is not registered, they cannot pursue their business in this sector. The following steps are taken to handle this procedure.

FBR Guideline

Federal Board of Revenue (FBR) Anti-Money Laundering and Counter Financing of Terrorism (AML/CFT)- Guidelines for Real Estate Agents, states the purpose of educating real estate agents about the compliance with anti-money laundering (AML) and counter financing of terrorism (CFT) along with its requirements. Guidelines contain the following things that are important to know.

FBR Document

The FBR document provides full AML/CFT regarding property transactions. It also covers risk analysis, risk reduction, customer due diligence, suspicious transaction reporting, and real estate transaction record-keeping.

Real estate agents who are tax filers have been recognized as Designated Non-Financial Businesses and Professions by the government (DNFBPs). These property dealers will be required to keep detailed records of their clients, do due diligence, record transactions, and record cash transactions over PKR 2 million.

Identification of your Business

While considering all this, you should first know if your business falls under the category of AML/CFT or not. FBR guideline has defined everything for that very purpose.

According to Anti-Money Laundering Act (AMLA)

Builders and developers who execute prescribed services in a prescribed manner are classified as real estate agents.

According to AML/CFT Regulations

A real estate agent is a builder, real estate developer, property broker, or dealer who executes a sale or purchase of real property, participates in a real estate transaction, or engages in professional transactional activity to transfer real property.

So, you fall under this category of business if:

You’re a builder, a real estate developer, a real estate broker, or a real estate dealer.
Execute a real estate property sale and acquisition.
Participate in real estate transactions as a buyer or seller.

Get yourself registered with DNFBPS or learn more about guidelines.

National Tax Number

It is a unique ID issued by FBR to verify businesses and is used for taxable transactions. If you are looking for how to find an NTN number in Pakistan by name, follow this process.

1.Go to the FBR IRIS portal and click on Registration for an unregistered person.
2.Enter all the details in the form and click on the submit button.
3.Log in to your account and edit the 181-application form. Enter all your personal, income, and property details, and you will receive NTN in a few hours.

FBR Registration Requirements

Go to any tax house with the following documents with you.

Certificate of Incorporation of the Company; CNICs of all Directors;
Original letter on company letterhead, signed by all Directors, confirming the Principal Officer and authorizing him to register for Income Tax and Sales Tax;
Cell phone with a SIM card registered to the person’s CNIC but has not yet been registered with the FBR.
The Company’s email address is used.
Original certificate of bank account maintenance in the Company’s name;
If you have a business, original proof of tenancy or ownership of the premises;
If you have a business, you must provide an original paid utility bill from your business premises that is no more than three months old.

As a property dealer, you must pay your tax completely. Income tax on construction services in Pakistan is different for different properties.