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DSCC to update holding tax rates

A move to multiply earning, remove payment discrimination

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12th-Jan-2017       Readers ( 89 )   0 Comments
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Mohammed Badrul Ahsan :
The Dhaka South City Corporation (DSCC) is set to multiply its earnings from holding tax through updating its decades-old holding tax rates, sources said.
The move came also to remove existing discrimination in their payment system, they added.
Holding tax is the major source of earning for the city corporation from where the DSCC earned Tk 1.75 billion out of the total revenue earning Tk 3.02 billion in the financial year (FY) 2015-2016.
The DSCC sources said the revenue-starved local government body can raise its earnings from the holding tax (holding, cleaning and lighting) sector by more than two times.
Keeping the assessment in consideration, the DSCC has set a target of over Tk 5.0 billion from the area in FY '17 against projection of Tk 2.85 billion in FY'16.     
However, to this effect the DSCC has initially started assessing the dwellers' holding tax payments in its Zone-1 and Zone-2 from October 2. It will later be extended to other zones in phases, they said.
When contacted, DSCC Mayor Mohammad Sayeed Khokon said they took the move to bring uniformity in holding tax rates as owners of similar type of property are paying taxes at different rates.
"We'll not raise holding tax rates…we will just bring uniformity and fairness in the existing tax structure, which has not been reassessed during the last 27 years and we want cooperation of our conscious citizens," he added.
DSCC sources said it did not reassess tax rates of a large number of holdings since 1989, creating unfair tax structures for the residents.
Seeking anonymity, a senior DSCC official said under the existing rate, property owners in the same area are now paying different rates of holding tax.
Such rates for the establishments that were built before 1989 were not reassessed over the years, giving rise to discrimination, he said.      
According to the rule 21 of The Municipal Corporations (Taxation) Rules-1986, "a new valuation list shall, unless otherwise ordered by the government, be prepared in the manner specified in the rules once in every five years."
The discriminatory tax structure has also created a serious problem to the revenue-earning process as property owners under the DSCC often complain or feel discouraged in clearing taxes, citing discriminatory rates of same-value property, he said.
The official said some 80,000 holdings in Zone-1 (7, 16, 17, 18, 19, 20, 21) and Zone-2 (1, 2, 3, 4, 5, 6, 8, 9, 10, 11, 12, 13) will be reassessed as part of the move.
Meanwhile, a building or land owner has to pay tax on the revenue earned from the property. It means the owner has to pay a specific rate of tax from the rent or from the revenue earned commercially using the property.
Holding tax is based on annual assessment of a building, complex and flat.
According to section 20 (3) of the 1986 tax law, the tax is fixed after deducting rent of two months from the total income as maintenance costs and also deducting the annual interest of any loan taken from Bangladesh House Building Corporation, any listed bank or from any other authorised financial organisation under the 'Registered Mortgage Deed', or after deducting 40 per cent of the total rent if the owner is staying in any part of the property.
Land owners were paying 12 per cent tax under this assessment till now.
In 2000, the owners had to pay 7 per cent tax only on building. In 2009, it was made 12 per cent after adding 2 per cent for waste management and 3 per cent for the street lights, according to the DSCC sources.

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