The National Board of Revenue (NBR) has implemented a substantial tax increase on transferring land and buildings in commercial and urban areas across Bangladesh, including Dhaka and Chattogram.
The new regulation, enforced through a Statutory Regulatory Order (SRO), will have significant implications for the public and real estate companies involved in ownership transfers. The tax will now be calculated as 8.0% of the deed value or Tk 2,000,000, whichever amount is higher, for valuable properties in upscale areas of Dhaka.
The previous nationwide tax rate stood at a flat 4.0%, but the revised rule introduces regional variations in land registration rates based on administrative divisions and property values.
Despite the seemingly reasonable approach on paper, the reality is that most registrations have historically undervalued properties to minimize tax payments, causing revenue losses for the government.
It remains to be seen how effectively the authorities will enforce the revised rates and prevent fraudulent practices.
The real estate sector already faces challenges in complying with the new development plan (DAP) to make Dhaka a greener and more sustainable city.
With the doubling of registration costs, particularly amidst an economic downturn, it is uncertain how this will benefit the national exchequer if property transfers decline. The substantial increase in fees may require reconsideration, as it could potentially hinder revenue generation and lead to a cautious approach from both buyers and sellers.