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This post was guest-written by the International Property Tax Institute (IPTI). It explores the latest developments in global property tax management and, in particular, the current challenges that corporate property tax managers face.
When it comes to international property tax management, challenges can be categorized in a number of different ways. However, it may be helpful to start by putting them into two main categories: internal and external. In this post, we'll explore external challenges facing today's corporate tax managers.
One of the main external challenges that face a corporate property tax manager with a global portfolio of properties is the problem of having to deal with multiple assessing and taxing jurisdictions, each with its own rules, regulations and practices.
These not only vary by country, but also by jurisdiction within each country. It can be very time-consuming and difficult to identify the relevant legislation that governs the property tax system within a particular jurisdiction. Even if the legislation, which may not be in English, can be identified, finding out how it is implemented in practice can be equally challenging.
Busy corporate property tax managers usually don’t have the time to devote to researching the internet and other sources in order to find out what local procedures and practices may impact the assessing and taxation process. Local experts are probably going to be required in order to provide the necessary information; however, it is not always easy to find them.
Of course, obtaining information about the system is only the first part of the process. After that, it is necessary to determine to what extent the jurisdiction concerned has applied the prescribed legal and administrative framework in arriving at both the assessed value (assuming it is an ad valorem system) and the property tax calculation.
That leads on to the next part of the research process which involves collecting appropriate market data which can be used to both “test” the assessed value of the properties concerned and, if necessary, making an appeal.
Obtaining reliable data concerning open market transactions and other value-significant data can be equally challenging, particularly if dealing with less developed countries. It may also be helpful to gather information about the assessed value of other properties which are similar to those for which the corporation is liable so that comparisons can be made.
A combination of market data and assessed value data, recorded and analysed in a consistent manner, is likely to provide the global property tax manager with an initial indication as to whether there are, at least on the face of it, any anomalies about a particular property’s assessed value and/or tax bill that need more careful investigation.
All the factual information obtained, and analysis undertaken, needs to be collated and stored in a consistent, easily accessible and understandable manner. This is a data intensive process which is why modern technology is indispensable for the global property tax manager. The more properties there are within the corporation’s portfolio, the more essential it is to have efficient and effective software support.
Other external challenges include dealing with a potentially large number of individuals and/or companies that are engaged to assist the corporation in managing both its day-to-day operations and, more specifically, its property tax liabilities. This may include consultants retained to provide advice on assessment matters and attorneys engaged to deal with legal issues, including the handling of appeals.
Up to date details of all these external contacts, and the properties in respect of which they have been retained, need to be stored in the property manager’s software system to ensure they can be located quickly and easily when required.
Another important set of external contacts for the property tax manager will be the assessors responsible for putting assessed values on the corporation’s properties. Due to the number of assessors involved, and turnover of their staff, it may not be feasible to build personal relationships with them, but that is a desirable objective. At the very least, contact details for the assessors, and the tax office, need to be held within the property tax management software so they can be easily called up when necessary.
Of course, one of the most important challenges is to ensure that correct payments of property tax due are made, at the right time, so that no penalties are incurred. One of the risks associated with global corporations that have large property portfolios is the reputational damage that may arise if significant payments of local property tax are, inadvertently, missed.
The International Property Tax Institute (IPTI) is widely recognized as the world’s leading organization on property tax policy and practice. IPTI’s mission is to provide impartial, objective expert advice in the area of property tax systems and promote the concept that these systems should be fair and equitable and meet the needs of all stakeholders, i.e., governments, taxpayers, practitioners and academics. In addition, IPTI seeks to ensure that property tax systems contribute to the provision of high-quality services for the benefit of communities.
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