Realtors demand cuts in tax on used flats

Realtors yesterday urged the government to cut taxes on the registration of used flats to boost sales in the secondary market.

Currently, a tax of 14 percent has to be paid for the registration of new apartments. Similar taxes are imposed on the transfer of used homes, which acts as an impediment to the secondary market, according to realtors.

"We have reduced the fees for the transfer of used cars here. But the taxes on the registration of second-hand flats and other fees remain the same as new flats," said Liakat Ali Bhuiyan, vice-president of Real Estate and Housing Association of Bangladesh or REHAB.

“If the tax is reduced to 3.5 percent on the transfer of used flats, it will create jobs for many. Revenue collection will also rise."

Bhuiyan made the appeal while placing the revenue proposals for fiscal 2016-17 before the National Board of Revenue.

Used flats are currently transferred in line with the property's value fixed by the government. No depreciation of value is allowed, even when the apartments are old, he said.

The rate remains the same even if ownership changes 100 times, according to Bhuiyan.

REHAB's recommendation comes at a time when demand for used apartments is on the rise. Urban clients seek to buy used apartments for lower prices, to move into smaller or larger units or to shift to a new, convenient location, said developers.

Bhuiyan said nearly 5,000 old flats change hands every year in Bangladesh.

In addition, REHAB urged the government to cut the registration cost of new flats to 7 percent from 14 percent now.

To add vigour to the sector and curb the illegal transfer of funds abroad, REHAB urged the NBR to exempt homebuyers from explaining the sources of funds in income tax and other legal records.

"Many term it black money, but we call it undeclared money. If undeclared money is allowed to be invested without question, holders of the money will come under the tax net in future," he said.

MISDECLARATION, MISUSE OF BONDED WAREHOUSES

Along with REHAB, representatives of a number of sectors, including steel and re-rolling mills, stone traders, plastic goods manufacturers, spectacles and watch makers, also submitted shared proposals to boost their businesses.

Some urged the NBR to prevent the misdeclaration of imported goods and misuse of bonded warehouse benefits, under which raw materials and accessories of different sectors, including garment, are allowed to import duty-free goods to make finished products before exports or domestic sales.

"Finished plastic goods are being sold here below the international market rates. It shows that there is under-invoicing of imports. It must be stopped," said Shamim Ahmed, former president of Bangladesh Plastic Goods Manufacturers and Exporters Association.

It is now easy for revenue officials to know the prices of finished products abroad, he said. "It is just a click away."

"We are suffering as manufacturers. There are huge misdeclarations in the import of spectacles. It is unclear to us how imported spectacles are sold at such cheap rates," said Manjurul Hoque Sikder, president of Bangladesh Optical Industries and Traders Association.

He demanded a 100 percent physical examination by customs officials prior to the release of spectacles import consignments.

On the issue, NBR Member of Customs Policy Md Farid Uddin, promised to examine the issue and take measures.

Wall-clocks are assembled locally at the cottage level, said M Kawsar Uzzaman of Bangladesh Watch Merchants Association. “So the high duty on wall-clock imports will help the sector flourish.”

Mohammad Shahjahan, secretary general of Bangladesh Steel Mill Owners Association, urged the NBR not to hike import duty on billets.

"Some firms have started making billets here. But we are yet to attain self-sufficiency and not every re-rolling mill has the capacity to make billets," he said.

“Rod prices will rise in the case of a spike in the duty on billets. It will only benefit some big companies,” Shahjahan said.

“The spiral in import duty will ultimately affect implementation of the government's annual development programme, as well as construction work in rural and urban areas."

Abdul Ahad, president of stone traders' body Bangladesh Pathor Babosayee Samity, said a section of cement makers import huge quantities of stones and sell them, affecting local boulder crushers.

The import duty on broken stones should be raised to protect jobs, Ahad said.

Abdul Matlub Ahmad, president of Federation of Bangladesh Chambers of Commerce and Industry, said the big industries are getting more benefits than the smaller ones, who now want a level playing field. "The big businesses are eating up the small businesses."

"It is good that we focus on large firms but the time has come to pay attention to the small and medium enterprises," he said, adding that the growth of SMEs has helped neighbouring countries such as Thailand and India.

The FBCCI chief also demanded NBR increase monitoring to prevent the misuse of bonded warehousing by a section of dishonest people.