What is the purpose of Land Tax?
LAND tax was introduced as one of the measures to achieve the objectives of land reform. The tax collected will generate revenue which will be used to develop the land acquired for resettlement of the previously disadvantaged and development purposes. The tax will be deposited in a Fund to be called Land Acquisition and Development Fund provided for in the Agricultural (Commercial) Land Reform Amendment Act of 1995. The objective of the Fund is to acquire and develop agricultural land.
What is Property Valuation for land tax purposes?
Property valuation is the process of determining a property’s ‘unimproved site value’ for land tax purposes as of a specific date.
Unimproved site value is not market value; however, it is close to the average market value in each agro-ecological zone (AEZ) which also includes carrying capacity zone or zone of the same inherent potential productivity of agricultural land. Unimproved site value is determined by applying the rules and procedures that are contained in the Land Valuation and Taxation Regulations of 2007 in general and regulation 4(6) and 4(7) in particular. These regulations are part of Agricultural (Commercial) Land Reform Amendment Act of 1995.
What is the Basis on which Agricultural Land will be valued for tax purposes?
The Valuation of agricultural land for tax purposes is determined through a mass valuation/appraisal approach. The value is directly linked to the open market value for such land in its unimproved state and the natural inherent productivity of the land.
• Assuming a well informed and prudent buyer of agricultural land, land of the same natural productivity should be bought for the same price. Land of the same carrying capacity will therefore have the same unimproved site value.
• The agricultural land will be valued on a statutory basis as provided for by the Land Valuation and Taxation Regulations.
Who will be liable for the land tax?
The tax will be levied on all owners of commercial agricultural land.
Which Ministry is responsible for the implementation of land tax?
The Ministry of Land Reform is responsible for the implementation of the Agricultural (Commercial) Land Reform Act. Land tax is implemented in consultation with the Ministry of Agriculture, Water and Rural Development and the Ministry of Finance.
The Ministry can be contacted through the Head Office and Regional Offices. The Directorate of Valuation and Estate Management is directly responsible for undertaking the activities linked to the implementation of land tax.
Which legal framework provides for the implementation of land tax?
A) Land tax was introduced under the provisions of Agricultural (Commercial) Land Reform Act, Act 6 of 1995 and its subsequent Second Amendment Act, Act 2 of 2001 and 2003.
B) The Act provides for regulations to be made by the Minister of Land Reform. The Regulations which provide the guidelines for the implementation of the provisions of the Act are called the Land Valuation and Taxation Regulations of 20071.
How will the Unimproved Site Value be determined?
The Directorate of Valuation and Estate Management maintains an up-to-date property sale database for all transactions taking place in the country based on information from the Deeds Registry. When establishing the unimproved site value the Valuer will consider all the characteristics of the property but adhere to the provisions of the Land Valuation and Taxation Regulations.
The process of determining the unimproved site value involves:
1) The inspection of the property sales for the past three to five years.
2) The analysis of the sales to separate the land from the improvements. The value of the improvements is determined through the Depreciation Replacement Cost basis. The resultant figure is then deducted from the sale price, producing the residual amount that represents the amount paid for the unimproved land (representing the unimproved site value).
3) The analysis usually produces a definite pattern of value throughout the country. The value correlates very well with the natural productive potential of the land and in particular the carrying capacity.
How will the tax rate be applied?
The tax rate will be determined by resolution of the National Assembly as provided for under section 76 (B) of the Agricultural (Commercial) Land Reform Second Amendment Act, Act 2 of 2001.
The first farm owned by the same registered owner will be currently taxed at a rate of 0.75% of the Unimproved Site Value and this rate will progress at the rate of 0.25% for any additional farm. Those who own one property will pay tax equal to 0.75% x the Unimproved Site Value of the property.
Absentee landlords/Foreign nationals will currently pay a tax equal to 1.75% of the Unimproved Site Value on the first farm and this rate will progress at 0.25% for any additional farm under the same ownership.
Section 76(1)(a) of Agricultural (Commercial) Land Reform Second Amendment Act provides the formula for computation of land tax:
T = V x R
In this formula-
T -represents the land tax payable
V -represents the unimproved site value (the value of the land in its natural form) and;
R –represents the rate of land tax and this rate will progress as the number of the farms owned by a particular owner increases.
Example: Suppose your land is situated in a value zone of N$200/ ha bare land value, and the size of the land is 6000 hectares. Assuming you are not an absentee landlord/ foreign national, the tax payable will be:
T = (6000 x 200) x 0.75% = 9000 per year.
If the particular owner has a second farm which is located in value zone of N$380/ha in extent of 6000 ha, the tax payable will be calculated as follows:
T = (6000 x 380) x (0.75% + 0.25%)
= 2,280,000 x 1% = 22,800 p.a
Can I object to the valuation?
When may I object?
The Provisional Valuation Roll will lie open for inspection for a period of 21 – 30 days as provided by sub paragraph 6(14) of the Land Valuation and Taxation Regulations. The registered owner of taxable land will be required to inspect the Provisional Valuation Roll and lodge an objection within the same period. The objection should reach the office of the appointed Valuer/Minister within the 21 – 30 days period.
Can I base my objection on the fact that I feel my taxes are too high?
Where do I get a Notice of Objection Form?
The Notice of Objection Form can be obtained from the office of the Valuer General and at all places where the Provisional Valuation Roll will be displayed. The ministry of Land Reform officials at the centres will assist landowners/ farmers who may have issues to raise concerning the entries on the valuation roll and advise them on the correct form to complete depending on the issue raised.
Form 1 should be completed if the landowner/farmer is objecting to the unimproved site value placed on their land.
Form 2 should be completed if an agreement has been reached with the appointed valuer and his team, or where an objection is withdrawn.
Form 3 should be completed if the landowner wants to correct the particulars shown on provisional valuation roll for inspection.
Can I withdraw my objection?
Yes. If you are convinced that the objection is not the valuation, you may decide to withdraw it. Cost may be awarded for any frivolous objection which may be aimed at wasting the Valuer’s time. The Valuer, his/her delegate will discuss with you before the sitting of valuation court and try to clarify and/or resolve the issue raised in the objection.
Who is exempted from paying tax?
Section 76(B) of the Agricultural (Commercial) Land Reform Second Amendment Act exempts previously disadvantaged new entrants into the agricultural sector from payment of the land tax. Land used for the following activities will also be exempt from land tax:
• A church, mission, hospital, school, or hostel, provided such activities shall not be for profit or gain;
• Any state-aided institution, or any charitable institution.
How do I apply for land tax exemption?
Exemption will be given on application by the representative land owner. The application for exemption shall be in such a form as may be determined by the Minister.
Where can I obtain further information with regard to Land Tax?
Legislation governing valuation appeals is provided in the Valuation and Taxation Regulations.
For more information Contact:Protasius Thomas on
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