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DEVELOPING OF MASS APPRAISAL FOR PROPERTY TAXIN INDONESIA

16th AVA Congress, Bangkok, July 2010

by: Arridel Mindra, Adv. Dipl. Est. Mgmt, MSc.(Certified and Licence Appraiser)

Directorate General of Taxation, Ministry of Finance, INDONESIA

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The Republic of Indonesia2

Arridel Mindra, Development Mass Appraisal for Property Tax 2010

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INDONESIA MACRO ECONOMIC INDICATORS2008 - 2010

Indicators 2008 2009 2010*

Economic Growth

5.51% 5.40% 5.80%

Inflation Rate

6.40% 5.50% 5.30%

Exchange Rate to USD

8,939 8,600 9,200

Interest Rate 7,36% 6,80% 6,50%

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Revenue of Property Tax in Indonesia2004 - 2009

YearProperty Tax Revenue Collected

Nominal (Rp.000) Growth Achievement

2004 11,740,966,542 NA 115%

2005 16,206,036,181 38% 121%

2006 20,883,723,381 29% 133%

2007 24,156,008,909 16% 114%

2008 25,187,539,660 4.2% 97%

2009 24,272,901,487 - 3.6% 108%

Average 17% 118%Resource: DGT, MoF Indonesia, 2010

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Management of Property Tax in Indonesia

• Manage by Central Government c.q. DGT, MoF• Management includes:

• Data Collection and Data Maintenance• Valuation and Assessment• Tax Bill issuance and distribute to tax payer• Revenue Collection and Law Enforcement• Objection and Appeal Service• Information and Consultation Service

• 90 million parcel (land and building) tax object• 65 million person/coorporate tax payer• Revenue sharing between Central , Regional and Local govr.

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Property Tax data management system is developed early 1990’s called SISMIOP (Land and Building Tax Object Management Information System) by Computer Basis.Characteristics of SISMIOP

Simplicity of Design and OperationPermanentSimultaneous automatic up date of information.Internal automatic of information.

SISMIOP has been support by latest mapping technology that called Geographic Information System (GIS).SISMIOP has been support by Computer Assisted Valuation(CAV) for building valuation.

Data Management System For Property Tax in Indonesia

6 Arridel Mindra, Development Mass Appraisal for Property Tax 2010

BASIC DATA MANAGEMENT MODULE

DATA COLLECTIONCOMPONENT

MAP & FORMS MGMT COMPONENT

DATA ENTRY VALIDATIONCOMPONENT

DATA FILE MAINTENANCECOMPONENT TAX BILL PRODUCTION MODULE

TAX BILL PRINTINGCOMPONENT

RECEIPT PRINTINGCOMPONENT

TAX ROLL PRINTINGCOMPONENT

BILLING STATISTICCOMPONENT

VALUATION & ASSESSMENT MODULE

VALUATIONCOMPONENT

ASSESSMENTCOMPONENT

VALUE & ASSESSMENT STATISTICS GENERATION COMPONENT

PERFORMANCE MONITORING MODULE

TAX PAYMENT MONITORINGCOMPONENT

PAYMENT POINT MONITORINGCOMPONENT

ENFORCEMENT MONITORING COMPONENTINFORMATION RETRIEVAL MODULE

SYSTEM ACCESSMANAGEMENT COMPONENT

MODIFICATION MONITORINGCOMPONENT

INFORMATION RETRIEVAL COMPONENT

ONE STOP SERVICE MODULE

PRESENTATIONSMONITORING COMPONENT

ONE STOP SERVICECOMPONENT

INFORMATION RETRIEVAL COMPONENT

PROPERTYDATA FILE(NOP)

TAX PAYERSPRESENTATIONSFILE

SISMIOP MODULAR DESIGN:


Tax base is Market Value of Land and BuildingBase Tax rate is flat 0.5%Taxable Value : 20% and 40%Urban and Rural Sector : the value < Rp 1 billion : 20% the value > Rp 1 billion : 40%

Mining, Forestry and Plantation Sector : 40%Effective Tax rate are 0.1% and 0.2%Non Taxable Value is Rp. 8.000.000 cross the aboardFormula : Tax Bill equal to(Market Value - Non Taxable Value) x Effective Tax Rate(Market Value – Rp. 8.000.000) x (0.1% or 0.2%)

• Determine the Market Value as tax base is important

Formula for Property Tax Calculation



Cost Approach which building value define by Depreciated Replacement Cost method

Cost Approach which land value define as a vacant land by comparison method


Mass Appraisal for Land Value

Determine the Land Value by Mass Appraisal using the Land Value Zone (LVZ) System.LVZ System is zoned a group of parcel that have same average value.LVZ parcels of land are grouped by criteria of:

Similarities of land useAvailability of public facilitiesAccessibilityPotential Land Development Values

Every LVZ has an Average Indicated Value (AIV) that is determined by three stages:Firstly, land transaction data are collected for every LVZSecondly, every land transaction data is analyzed to be indicated market value regarding time adjustment and kind of data (i.e. selling price, mortgage, and offering price) adjustmentThirdly, AIV of each LVZ is the mean of indicated market values (after adjustment) of land transaction data

Land value (as LBT base) of each parcel of land in a LVZ is determined by it’s AIV.

AAAA

Land Zone Value Land Zone Value Analysis for Analysis for

Mass Appraisal Mass Appraisal

(data available)(data available)

NIR: Rp. 1.105.200NIR: Rp. 1.105.200

AnalysisAnalysis::

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AAAA ABAB

ACAC

ADAD

Land Zone Value Land Zone Value Analysis for Mass Analysis for Mass

AppraisalAppraisal

(no evidence available)(no evidence available)

NIR: Rp. 806.633NIR: Rp. 806.633

NIR: Rp. 1.004.146NIR: Rp. 1.004.146NIR: Rp. 1.251.100NIR: Rp. 1.251.100

NIR: Rp. 757.300NIR: Rp. 757.300

AnalysisAnalysis::

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Land Value Zone Map Supported by GIS


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Estimation of the building value is based on the Cost Method.CRN define by The Building Cost Tables (BCT). BCT is arranged by using quantity survey method for the building model, which represents a group of valued building.The building depreciation is design base on combination between effective age, CRN/m2 and building condition by survey.Process of building valuation is using computer assisted valuation (CAV) as a mass appraisal and individual appraisal for special construction.

Computer Assisted Valuation (CAV)The CAV system is using Cost Approach base on mass valuation model.The CAV process needs categorization and standardization of LBT building objects.The CAV categorized two groups of building are standard and non-standard.The CAV is used to value the standard object that not fulfill those criteria :

floor area of more than 1000 m2 or more than four stories or land area more than 10,000 m2.

Sample of BCT for standard building refer to table below :

Mass Appraisal for Building Value16


NUMBER OF FLOOR1

207,000269,000278,000323,000372,000399,000424,000

FLOOR AREA1-6970-99

100-149150-299225-229300-449450-549>=550 436,000

2 - 4207,000278,000337,000404,000470,000536,000601,000641,000

BCT OF MAIN COMPONENT (Rp/m2)

1. ROOF Concrete slab Rp. 93,000/m2, Concrete roof tile Rp. 71,000/ m2, Clay roof tile Rp. 45,000/ m2, Corrugated eternite roof Rp. 22,000/ m2, Corrugated zinc roof Rp. 15,000/ m2,

2. WALL FINISHES Glass Rp. 122,000/ m2, Aluminium Rp. 60,000/ m2, Concrete Rp. 76,000/ m2, Brick Rp. 57,000/ m2, Timber Rp. 21,000/ m2, Zinc Rp. 13,000/ m2.

3. FLOOR FINISHES Marble Rp. 134,000/ m2, Ceramics Rp. 59,000/ m2, Terrazzo Rp. 52,000/ m2, Cement floor tile Rp. 28,000/ m2,

4. CEILING Acoustic Rp. 91,000/ m2, Thin plywood Rp. 38,000/ m2.

BCT OF MATERIAL COMPONENT (Rp/m2)

Building Cost Table (BCT) for Standard Building


The BCT is designed for valuing non-standard buildings that have special characters for example commercial high-rise building.The BCT enables the updating of building values periodically through data entry of building costs into the system.The basic features of the BCT are:

Logical procedure and process of valuation can traced back and updating;Accommodates to internal and external changes;Calculating building cost is achieved through actual staging of stories development and actual composition of building material.Buildings are classified into 16 categories of types and matched with 19 kind of facilities and equipments.For calculating value with cost approach, each building structure is divided into three components i.e. main structure, building material and building facilities.

Samples of BCT refer to table below:

Building Cost Tables (BCT) for Non-Standard Building


572,877

594,586

617,118

640,503

664,775

689,966

716,112

743,248

771,413

800,646

657,382

663,396

522,540

501,166

544,825

461,006

480,667

568,060

592,286

617,546

643,883

671,343

FLOOR.NUMBER

BUILDING USAGE CODE2/9 4 5 6 7 12 13 16

1 506,944 578,332 655,286 577,269 611,189 643,913

2 522,859 622,644 592,222 616,781 660,286

3 539,275 670,351 607,562 622,424 677,075

4 556,206 721,713 623,300 628,118 694,291

5 573,668 777,011 639,445 633,865 711,945

6 591,679 836,546 656,008 639,664 730,048

7 610,255 900,642 673,001 645,516 748,611

8 629,414 969,650 690,434 651,422 767,646

9 649,175 1,043,945 708,318 787,165

10 669,556 1,123,932 726,666 807,181

Etc.

BCT MAIN COMPONENTS (RP/m2)


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INTEGRASIINTEGRASI

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Appraisal Review for Property Tax in Indonesia is used Assessment Sales Ratio Analysis (ASR)

(Standard Level of Assessment : 80% to 110%, refert to IAAO)


Challenging of Mass Appraisal System Development

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Thanks for your attention

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