The government will take some key policy measures to control the under-valuation of immovable properties including the signing of agreements between the Federal Board of Revenue (FBR) and provincial authorities on uniform immovable property valuation tables.
Senior FBR officials, familiar with the matter told ProPakistani that two key policy measures have been agreed by the federal government to check under-valuation of immovable properties during 2020-21.
The first measure is to sign MoUs between the federation and all provinces on the online data-sharing pertaining to the immovable property. The second measure is to ink agreements between the FBR and the provincial governments on enhanced immovable property valuation tables.
FBR officials stated that the FBR is in the process of a consultative process with the provincial revenue authorities for the signing of the agreements on the upward revised valuation tables of immovable properties.
Both measures are expected to be implemented during the current fiscal year.
Sources further added that the provincial governments are also required to issue notifications for adopting the Federal Board of Revenue’s valuation tables applicable to Urban Immovable Property Taxes (UIPTs) to raise the assessment values of immovable properties by up to 85 percent of the actual market values. The upward revision in the valuation tables was the responsibility of the provincial Excise and Taxation Departments and the provincial Finance Departments.
According to the sources, nationally the collection of UIPTs falls significantly short of its actual potential. The current collection is only a fraction of the total urban services provided by the various provincial governments.
The potential collection is undermined by the outdated property valuation tables and outdated annual rental value tables. There is, therefore, a need to update the valuation table to bring them in line with true market values to allow the government to improve their provincial revenue yields.
Under the timelines, it is expected that the NFC Coordination Committee approve a policy for how to address the UIPT through the NFC to determine a linkage of annual rental value with the FBR updated property valuation tables.
The provincial governments will also undertake rapid surveys and develop updated annual rental value (ARV) valuation tables in line with 85 percent of the market value by December 2020.
Sources further stated that the government will seek feedback from stakeholders to finalize the valuation table by January 2021.
It is expected that the governments of the Punjab, Sindh, the Khyber-Pakhtunkhwa, and Balochistan will announce their updated UIPT valuation tables in line with the FBR tables or with 85 percent of the existing market value by end-April 2021, the sources added.