Simplified declaration process for real estate agents – Journal


ISLAMABAD: On the intervention of the National Coordination Committee (NCC) on the Financial Action Task Force (FATF) to respond to international compliance, the Federal Revenue Council (FBR) has clearly defined the reporting requirements for stakeholders in the real estate sector, including brokers, developers and builders recently registered as Designated Non-Financial Businesses and Professions (DNFBPs).

The process was streamlined to facilitate around 22,000 registered real estate DNFBPs who struggled to complete a four-page data sheet covering more than four dozen questions about property sellers and buyers. This was a major obstacle to completing the only outstanding point out of a total action plan of 27 points. The updated mechanism would be shared with the FATF by this weekend.

Following a series of consultations, the NCC accepted the requests on August 17 and reduced the reporting requirements to four acceptable practical standards for DNFBPs. By virtue of the decision, the RBF has now defined the reporting and documentation requirements, role and functions of these DNFBPs.

Speaking to the media on Monday, Muhammad Ahsan Malik, vice president (Punjab) of the Federation of Real Estate Agents (FOR) and secretary general of the Association of Real Estate Consultants (RECA) of the Twin Cities, said the director general of DNFBP has given instructions to all relevant departments that they should only deal with registered DNFBPs. This will ensure that over 500,000 real estate dealers and developers etc. will either have to register as an EPNFD or work under the umbrella of already registered EPNFD.

Updated mechanism to share with FATF

The law has not been amended to comply with FATF requirements, but the relevant rules have been simplified to relax certain unnecessary conditions for client due diligence by DNFBPs. The FBR portal would be downloaded with the requirements specified for developers and builders registered as EPNFD.

Now registered developers and builders are able to comply with established rules and regulations without any confusion. First, each developer and builder will have to verify the name of the buyer and seller on the United Nations list containing the names of 4,500 banned persons.

If the name of the buyer or seller is not on the list, there is no problem to transact. However, if any of the names are found in the UN list, the developer and manufacturer should immediately report it via a mobile app to the relevant authorities under the direction of the Director General of DNFBPs.

Second, the developer and builder would be required to keep copies of the sale and purchase contract and CNICs of sellers and buyers.

Third, customer due diligence is also a requirement for builders and developers registered as DNFBPs. The buyer and seller would also submit a form on the actual beneficial owner of the property. If someone is purchasing a property on behalf of someone else, the true beneficial owner must be declared through a form to provide a full financial trail.

Fourth, the cash transaction report must also be submitted by the developer and the builder. At present, the dealership or real estate developer is required to submit the cash transaction report of Rs2 million and above. The majority of real estate transactions are done on FBR value or DC rates.

Payment will need to be made through the buyer’s bank account regarding the declared value of the FBR value or DC rate of the property, as applicable. The money trail must be available for the purchase of real estate.

By law, the developer and builder are also required to keep records for a period of five years, Malik said.

The questionnaire for developers / builders and jewelers is the same and it is difficult to suddenly show compliance with all kinds of laws, conditions and legal requirements. Legal requirements of DNFBPs must be fulfilled by transfer / registration authorities / companies i.e. CDA, LDA, KDA, City of Bahria, DHA and tax authorities etc. , not by individual real estate agents, he added. .

Out of 500,000 real estate agents working across the country, the RBF registered 22,000 as DNFBPs, who are income tax filers.

Non-declaring real estate agents would be targeted by the general management of DNFBPs.

The ultimate goal is that only registered resellers and developers can do business in the market. Record keeping by developers and builders has been clarified and defined. Now there is clarity among dealers on the rules and regulations, he added.

Posted in Dawn, le 31 August 2021

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