BIR eyes hike in zonal valuations nationwide

Move to boost agency’s collection of capital gains.

MANILA, Philippines—The Bureau of Internal Revenue (BIR) is set to increase the zonal valuations nationwide in a bid to ramp up tax collections from the sale of real properties.

At the BIR’s head office in Quezon City last week, Internal Revenue Commissioner Joel Tan-Torres met with revenue district officers all over the country to discuss the plan of raising zonal valuations, which serve as the minimum bases for computing the 6-percent capital gains tax on the sale of real estate.

BIR officials said an increase in zonal valuations was one of the measures being considered by the tax bureau to meet its collection goal of P830.4 billion for 2010, which it should meet to help the national government keep its budget deficit within the intended ceiling.

Internal Revenue Deputy Commissioner Nelson Aspe said in an interview that zonal valuations nationwide were already outdated. The last time zonal valuations were updated was about 10 years ago, he added.

The BIR computes the 6-percent capital gains tax on the sale of a real property either based on the zonal valuation or the selling price, whichever is higher. Officials, however, said most taxpayers did not declare the actual selling prices of their property and used the outdated zonal valuations in remitting taxes to reduce their expenses.

Tax officials said that under-declaration was one way of evading the payment of proper taxes. To address the revenue leakages arising from the under-declaration of selling prices for properties, Aspe said the zonal valuations have to be updated.

BIR district offices have been directed to tap appraisers to help determine proper zonal valuations in their areas.

Public hearings on the planned increase in zonal valuations will also be done nationwide to better inform taxpayers of the BIR’s measure.

Aspe said the BIR could not yet determine the amount of potential additional revenues that could result from the increase in zonal valuations.

The amount of increase will vary across revenue districts in the country. Localities that have transformed over the past decade from municipalities to cities will have a much higher rate of increase in zonal valuations than those that have remained as municipalities, BIR officials said.

Localities that saw an increase in their commercial and industrial areas must also increase their zonal valuations at a more rapid pace than those whose areas are composed mostly of residential ones.

Under the leadership of Joel Tan-Torres, who was appointed to head the BIR in November last year, the tax bureau was able to put an end to the agency’s tax collection shortfalls.

The Department of Finance, head agency of the BIR, earlier reported that the tax bureau collected P265.1 billion in the first four months of the year, exceeding the goal for the period of P243.9 billion.

However, Tan-Torres admitted that the BIR might have a difficulty shoring up tax collection in the second half of the year because recently implemented laws that grant tax relief were expected to have their full impact felt.

These laws included the Real Estate Investment Trust (REIT), the Personal Equity and Retirement Act and the exemption of senior citizens from the value-added tax (VAT).

To compensate for the revenues to be lost from these laws, Tan-Torres said there has to be new measures to generate additional taxes for the government.

Source: Inquirer