Pakistan

Overview

Pakistan levies no land value tax, and the main recent source on its property taxation, a 2026 World Bank report by Cristian Óliver Lucas-Mas and Irum Touqeer, does not propose one. This is a case of property-tax administration and of a change of valuation base, from annual rental value to capital value.[1]

Pakistan is a federal state, and the report calls the system "fragmented across federal, provincial, and local governments" (p.1). It argues that the system relies heavily on taxes levied at transfer and under-uses recurrent taxes on ownership. The one recurrent tax with a revenue figure is the urban immovable property tax (UIPT), at "about 0.13 percent of GDP", against 0.3–0.6% for low- and middle-income countries and about 1.2% for higher-income ones (p.3). The report gives no year or source for these figures and no total for all recurrent property taxes.[1]

The Tax Map

The report sorts levies by taxable event and tier of government (Table 1, p.7–8).[1]

Transfer levies. Stamp duty is 1% in Punjab, 2% in Sindh, 1% in Khyber Pakhtunkhwa (KP), 2% in Balochistan, and 1% for filers or 2% for non-filers in Islamabad Capital Territory (ICT) (Table 6, p.10). CVT, provincial and buyer-paid, is 1%, 2%, 1%, 2% and 2% in the same order (Table 10, p.12). For Punjab the text says stamp duty "is combined with CVT at 2 percent", although each table shows 1% (p.10). Federal advance tax on purchase (s.236K of the Income Tax Ordinance (ITO) 2001) is 1.5–2.5% for filers and 10.5–18.5% for non-filers, by value band (Table 2, p.8). Capital gains tax on property bought before 30 June 2024 starts at 15% and falls to nil after six years for open plots (Table 3, p.9); for purchases from 1 July 2024, active-taxpayer individuals face a progressive 15–40% (Table 4, p.9).[1]

Deemed rental income tax. Section 7E of the ITO 2001, introduced by the Finance Act 2022, treats an owner as earning income equal to 5% of the property's fair market value and taxes that deemed income at 20%. It applies to properties exceeding PKR 25 million (p.13). By simple arithmetic, not stated in the report, that is 1% of market value a year. The report notes controversy over taxing unrealised gains: "a similar tax was repealed in 2024 by the Balochistan High Court on the same ground" (p.13).[1]

Agricultural land tax. Balochistan, Punjab and KP levy a per-acre land tax graded by productivity zone: an alternative minimum tax against agricultural income tax in Punjab and KP, a separate presumptive tax on land above 12.5 acres in Balochistan (p.13, 17). It is not a tax on land value.[1]

UIPT and the Shift from Rental to Capital Value

UIPT is a local tax on owners of urban buildings and land, administered by provincial excise and taxation departments, with collection in Sindh devolved to local councils from September 2024 (p.14).[1] As of the report's 2026 revision, the base is the annual rental value in every province except Punjab. The report calls it "a tax on deemed rental income, similar to Sec. 7E" (p.14). The report says UIPT "should serve as the core recurrent tax for local governments" but rests on outdated rental valuations and extensive exemptions (p.1).[1]

Punjab moved in January 2025 to a capital value system built on District Collector (DC) rates, exempting properties valued at Rs 5 million or less (p.14). The report states that "all remaining provinces have agreed to transition to CV by using DC tables for valuation" (p.14); it gives no dates for them. Sindh is described as "gradually transitioning" under an IMF programme (p.5). UIPT covers residential, commercial and rental property and, in some provinces, vacant plots (p.14).[1]

Valuation

The report identifies three parallel valuation systems: Federal Board of Revenue (FBR) tables, used for capital gains tax; Board of Revenue (BoR) tables set by District Collectors, used for stamp duty; and the excise departments' valuations for UIPT, historically on rental value (p.4). It says DC rates are lower than FBR rates, "the latter are presumed closer to market value" (p.4).[1]

In the report's account, FBR consults private property websites and uses "a thumb rule of keeping valuation at 80 percent of market value" (Box 1, p.5); it adds that it is unclear whether table updates use verifiable transaction data. Provincial boards, it says, apply an incremental uplift (for example 10%) when transaction data are missing, and taxpayers under-report values on transfer documents (p.5). FBR's recent table revision, adopted by BoRs for stamp duty, "is said to have increased informal property transfers" (p.5): a reported assertion, not a measured effect.[1]

Land Records and Cadastre

Land records in Sindh are "largely outdated"; those in KP do not cover 50% of the territory, and in Balochistan they cover 5%; Punjab "has made substantial progress" (p.4). In Sindh, two thirds of urban properties are not in the UIPT database, and Karachi's last property survey dates to 2001 (p.4). The report puts 60–65% of KP's territory outside the tax net (p.4). A footnote says revenue and housing-agency records together cover Punjab and Sindh but only half of KP and 5% of Balochistan, the rest being tribal areas under customary tenure (p.22). Punjab has digitised its land and property tax records, and its Punjab Land Records Authority (PLRA) sets the mutation fee (p.11, 22). These coverage figures are attributed in the report to no dated dataset.[1]

Recommendations and Roadmap

The report makes eight recommendations (p.20–22).[1] The main ones:

• a gradual shift from annual rental value to capital value, with formula-based valuation on objective indicators (rec. 1);
• valuation tables updated "after every 3-5 years" with sales-assessment ratio studies (rec. 2), and automated valuation models piloted first (rec. 3);
• an independent valuation agency serving UIPT, CVT, stamp duty and capital gains tax, separate from tax assessment (rec. 4);
• in the medium term, folding CVT into stamp duty, replacing both with an annual property tax, or replacing CVT with a piggyback on federal capital gains tax (rec. 8). Shifting to recurrent taxes "would help relieve the higher tax burden on land and real estate transactions" (p.22).

The strategic roadmap (Tables 25–26, p.23–24) lists activities, deliverables and objectives for administration and policy, with no dates, phases or sequencing. Timing language is general, such as "short- to medium-term" (p.1). These are the authors' proposals, not a government decision.

What the Report Does Not Say

• It does not recommend a land value, site value or split-rate tax; the recommended base is capital value, land and buildings together.
• "Land (Site) Tax" appears only as one of seven classified tax bases in Annexes 1–3 (p.25–26), described as "Neutral" in rate structure with "Unrealized value" as its economic capacity; the report does not say Pakistan has or should adopt it.
• Vacant plots are taxed by UIPT in some provinces and listed among the challenges ("capturing value appreciation of vacant plots", p.4); no measure is proposed.
• It has no analysis of incidence, capitalisation, land prices or speculation.
• The land-use conversion fee, a percentage of the rise in value on conversion to a more intensive use, is meant to "capture some of the increased value" (p.19). It is the nearest thing to value capture here, but the report does not frame it so.

See Also

• Telangana CURE Bill, Hyderabad — a South Asian contrast: it too leaves annual rental value, but for land value, not capital value of land plus buildings
• World Bank: Determinants of Property Tax Revenue — cross-country evidence on administration
• IMF: Taxing Immovable Property — the best-practice framework the report cites
• Brockmeyer: Property Tax in Developing Countries — compliance and enforcement context
• Franzsen & McCluskey: Property Tax in Africa — comparative administration
• Mass Appraisal Methods — ratio studies and automated valuation
• Objection: land cannot be assessed — the administrative-capacity objection
• King: Tax Authority and Land Authority in Ghana (2026) — another case where formal tax authority and the institutions that govern land do not coincide

Sources

1. Cristian Óliver Lucas-Mas and Irum Touqeer, Strengthening Immovable Property Taxation in Pakistan, World Bank, Washington, DC, 2026, DOI 10.1596/44905, Open Knowledge Repository handle 10986/44905, about 30 printed pages, licence CC BY 3.0 IGO. Page numbers above are the printed ones (PDF page minus four). Read in full — used for the tax map and statutory rates (Tables 1–13, pp.7–14), the s.7E deemed income tax (p.13), the UIPT base and the Punjab and Sindh changes (pp.5, 14) (A-claim; official report relaying law and practice; rates and legal changes are as of the report's 2026 revision and federal rates change yearly); the 0.13% of GDP figure and benchmarks and the land-record and tax-net coverage figures (pp.3–4, 22) (B-claim; no dated source given in the text); the valuation account, the 80% rule and the reported effect on informal transfers (pp.4–5) (B/C-claim; the report relays practice and reported assertions, and says the table-update process is not shown to use verifiable data); the recommendations and roadmap (pp.20–24) (C-claim; the authors' proposals). Tier 1 institutional source; the report carries the standard disclaimer that its findings do not necessarily reflect the views of the World Bank, so statements are attributed to the authors.