Special Business Tax When Reselling A Condominium Under Assessed Value


An interesting Supreme Court case in relation to taxation different between a company taxpayer and the revenue in relation to the calculation of the Special Business Tax in relation to the sale of a condominium by a company at a price that was under the Land Department appraisal value (also called assessed value) during the 1997 economic slump

The case was as follow:

The taxpayer a Company) sold a condominium for below its appraisal cost (but at market price) during the 1997 economic slump.

Now the revenue officer assessed the Specific Business Tax (SBT) on the appraisal cost using rules applicable for the registration of rights and juristic acts (the government fees 2% are always calculated on the government assessed value or appraisal value) whatsoever the transaction price.

The Supreme Court held that the revenue officer only had authority to designate the selling price of immovable property at appraisal cost for the registration of rights and juristic acts for personal income tax purposes, not for SBT purposes.

The Revenue Department failed to persuade the Court that the appraisal cost was the market price. Therefore, the price taken by the Company applied.


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