‘Valuation of property required’

By SHIRLEY MAULUDU
THE Internal Revenue Commission has uncovered gross evasion of stamp duties and undervaluation of properties in the property market, commissioner-general Sam Koim says.
Koim said as a result, the commission had introduced a new requirement, the mandatory valuation of properties, under stamp duty to address this issue.
“We have introduced a mandatory requirement of valuation of properties,” he told a recent media briefing. “We’ve come across instances where people were coming to us and declaring values which were significantly lower than the actual value that they were paying or to pay on the property.
“We are also aware that people are declaring themselves as first home buyers, but they are actually purchasing commercial properties for commercial purposes.
“For instance, they may be buying 10 blocks of units but they are declaring it as a first home buyer.
“This is also evasion.
“They are doing it purposely to benefit from the concessions given under the Stamp Duty Act, particularly for those concessions and reliefs available for first home buyers for properties they purchase to live in as their place of residence.
“We have seen also instances where people are paying, for instance, K500,000 on a property, but actual bank transfers over a period of time was structured in a way that they are paying about a million kina.
“These are some of the patterns of behaviour.” Koim stressed that the IRC was not trying to interfere with the property market.
“We are not trying to
interfere into the open and free market of property sales and purchase – the supply and demand powers that operate in the free market; we are not doing that,” he said.
“What we are doing is for our purposes.
“What we are trying to detect is fraud and evasion that is taking place.
Meanwhile, Koim also warned that transfer instruments that were being filled in, and the declarations that were made which were deemed or found to be fraudulent would invalidate the entire contact.
“Under the Land Registration Act, there is a provision that you can invalidate a land title on the basis of fraud.
“This message goes to banks as well, or property real estate agents, lawyers and whoever, is facilitating it.
“And (this) can also amount to criminal prosecution.”