Property owners say while they appreciate the Finance Minister’s proposal to decrease the property tax by one per cent, the percentage was never a problem. The issue, they said, was with the valuation of their properties and the lack of transparency about the way it was calculated.

Property tax is based on a percentage of the Annual Rental Value (ARV) of a property after a deduction of ten per cent for voids. For residential properties, the government has proposed to reduce the tax from three or two per cent and vacant residential land is 3.5 per cent.

Commercial property tax is five per cent, industrial with buildings is six per cent, industrial without buildings is three per cent, vacant commercial and industrial is five per cent, agricultural is one per cent and vacant agricultural is two per cent. The government moved to begin collecting only from residential properties in 2024. The proposed amendments, if approved, will extend the time for Valuation Division and the Board of Inland Revenue to complete their work, and give homeowners up to six months to lodge complaints.

According to the Office of the Prime Minister website, the rental value is a calculation of the rent the property will obtain on the open market if it were put up for rent.

“The qualified professionals at the Valuation Division of the Ministry of Finance are responsible for calculating the Annual Rental Value of properties based on the following established criteria: Location of the Property (Neighbourhood); Classification of the Property (Executive, Modern, Standard [I & II]); Category of the Property (Agricultural, Commercial, Residential, Industrial); Dimensions – Property Floor Area; Modifications to the particular property.”

But exactly how the ARV is calculated is still a mystery and many are complaining of exorbitant amounts for simple homes or widely varying amounts on different notices for the same location.

Afra Raymond, managing director of Raymond & Pierre Ltd, a company of chartered valuation surveyors, real estate agents and property consultants, said there were so many discrepancies because of the “mass valuation” approach which would produce a certain percentage of “erratic” valuations.

He added that, in his opinion, viewing the outside of a building to evaluate it was an acceptable way for the government to do so as there were many properties to get through.

“It is plainly impossible for the Valuation Division to inspect and measure each property which is to be taxed, so the approach has to be a crowd-sourced one in which the inevitable objections, and the resolution of those objections, refine the initially imperfect Valuation Roll. The Valuation Roll is the database which shows each property and is intended to allow the comparison of the properties/assessments.”

He also spoke to the Property Tax Act amendment tabled in Parliament on March 15 which sought to reduce residential tax from three to two per cent and includes a section that would extend the BIR’s deadline to issue notices of assessment to