Tokyo to speed up its assessment of real estate value for fixed assets taxation
The Tokyo Metropolitan Government (TMG) will enter talks with the Ministry of Internal Affairs and Communications (MIC) for a review of its procedures for assessing buildings to determine fixed assets tax. It will look into changing the current method to determine the costs of assets into a simpler method in order to give business owners a quicker insight into their tax liabilities. The aim is that MIC will change the evaluation standards, and introduce the simpler method nation-wide from 2020.
Fixed asset tax is a local tax, where owners of buildings or land pay 1.4% of the value, which is estimated by the municipality. First assessment takes place after a structure is completed, where all construction materials used are assessed and compiled into a estimation using the “reconstructive value method” (saikenchiku kakaku houshiki) For high-rise buildings this method could in some cases take two years to complete.
Two alternative methods will be under review. The “Acquisition Price Method” assesses the fiscal value on the basis of the acquisition price of the structure, which is reported to the authorities by the owners themselves. This method is already introduced in Shanghai.
The “Cost and earning return Method” used in many Western countries is also looked at, where an estimation is based upon the expected income generated from the building. The new methods would shorten the assessment period to a few months at the most.
Source: Nikkei Online, April 13, 2016