MAP backs creation of central valuation system for real property

The Management Association of the Philippines (MAP) supports the creation of a central valuation system for real property under the third package of the government’s tax reform program, but recommends a lower assessment level for property transferred among family members.

In a statement yesterday, the MAP said it backs the planned reforms to the country’s real property valuation as proposed in bills at the House of Representatives and Senate under Package 3 of the government’s Comprehensive Tax Reform Program (CTRP).

The reforms aim to put in place a central valuation system for properties utilizing market values as the basis to establish a single valuation base.

Under this system, the Department of Finance (DOF) will periodically set, update and publish a schedule of market values (SMV) for local and national taxation purposes.

“However, similar to real property taxation, MAP recommends that for national tax purposes, assessment levels be likewise applied on the DOF’s valuation, as published in the SMV, to temper the impact of inflation in property values reflected when the SMVs are periodically upgraded to conform to current market values,” MAP said.

As such, MAP is recommending an assessment level of 50 percent of DOF’s SMV for transfer mortis causa or transfer by death of estate property, and for the gratuitous transfer inter vivos of property among members of the family up to the fourth degree of consanguinity.

“The rationale for this being that transfer mortis causa is involuntary, mandatory pursuant to law and without valuable consideration. The latter is likewise the case in donation inter vivos,” the group said.

MAP said the lower assessment level for the stated transfers is necessary to give life to the rationalization of donor’s and estate tax rates to six percent, under Package 1 of the CTRP or the Tax Reform for Acceleration and Inclusion law.

MAP said the lower rate of six percent, which encourages high level of compliance going forward, would be eroded if the full market values, as appraised and periodically upgraded, would be used as the valuation base for non-commercial transactions among family members.

While MAP wants lower assessment level of 50 percent for transfer of property among family members, it supports the 100 percent assessment level for commercial property transactions for valuable consideration.

As for low-cost or socialized housing units, the MAP recommends the actual selling price of the properties to the first buyer to serve as the market value and assessed value to recognize the social purpose of the projects and be the valuation base for taxation.

MAP is likewise pushing for a public hearing to be conducted on the proposed reforms.