ISLAMABAD: The Institute of Cost and Management Accountants of Pakistan (ICMAP) has proposed the introduction of an annual vacant urban land tax in the Budget 2026-27, aiming to discourage speculative land holding, improve land utilization, and generate additional government revenue.
In its budget proposals submitted to the Ministry of Finance Pakistan, Institute of Cost and Management Accountants of Pakistan noted that Pakistan currently does not have a comprehensive nationwide taxation mechanism specifically targeting vacant urban land.
According to the proposal, while some provincial governments have introduced limited measures under existing property tax laws, these fragmented policies are not sufficient to address the growing issue of unused urban plots in major cities. ICMAP emphasized the need for a dedicated tax framework to bring idle land into productive use and improve urban planning outcomes.
Under the proposal, the tax would be imposed annually on undeveloped or long-term vacant urban plots, with the liability calculated as a percentage of the assessed market value of the land. The identification of taxable properties would be based on municipal land records, property databases, and modern digital mapping systems.
ICMAP has also suggested that higher tax rates may be applied to plots located in prime urban areas to discourage speculative land banking and encourage landowners to develop properties within a reasonable time.
The institute believes that such a measure would help address long-standing inefficiencies in Pakistan’s urban land market, where large portions of valuable city land remain unused for years while housing shortages, infrastructure demands, and commercial space needs continue to rise.
The proposal is primarily aimed at promoting productive urban development, increasing municipal and government revenues, and supporting sustainable city expansion. It is also intended to reduce speculative real estate practices that often drive up land prices and contribute to unplanned urban sprawl.
If adopted in the Federal Budget 2026-27, the proposed vacant urban land tax could bring a substantial amount of previously untaxed property into the formal tax net. It may also encourage new construction activity, improve land-use efficiency, and support better-organized development in Pakistan’s growing urban centers.
Tax experts believe the proposal reflects increasing concern over the economic and planning costs of idle urban land. If implemented, the measure could mark a significant shift in Pakistan’s taxation and property policy by linking fiscal reforms with urban development goals.
The recommendation by ICMAP comes as policymakers continue to examine new avenues for broadening the tax base and improving documentation of wealth and assets across the country.
