Tax managers suggest appointment of panel for fair market value

KARACHI: Tax managers have suggested the Federal Board of Revenue (FBR) to appoint valuation panel for determination of fair market price of moveable and immoveable properties.
Sources in the revenue authority said on Monday the board had received budget proposals 2015/16 from the Large Taxpayers Unit (LTU) Karachi – the biggest revenue collection arm of the FBR, which recommended appointment of valuers for the purpose of determination of value of any property or rent, asset, service, benefit or prerequisite.
In this regard, the unit suggested amendment to Section 68 of the Income Tax Ordinance, 2001, treating the fair market value. The unit said the amendment would help the FBR take assistance from independent professionals (private) where the determination of the value is not possible by the department.
For appointment of independent valuers, the unit suggested the FBR may prescribe qualification for the valuers and fix scales of remuneration for them as it may deem fit through a notification.
However, the unit said the cases should only be sent to the valuation committee / panel when a commissioner of Inland Revenue failed to determine the value of properties.Under Section 68 of the ordinance, the commissioner has been empowered to determine the fair price value in those cases where it was not ascertainable.
The FBR sources said that the suggestion was forwarded, seeking true declaration of property or assets sales and purchase.
Presently, transactions of most of the properties are either not documented or declared at the provincial collector’s rate, which are much lower than the open market rates. This has become a major source of concealing the income by investing in properties.
The sources said the LTU had identified such cases where companies had transferred the ownership to some of their directors at the book value with the intention to suppress the sale value. Interestingly, the book values are even lower than the collector rates.