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Component 3: Support to the Sales Price Register maintenance and strengthening of institutional cooperation with Tax authorities

CILAP | 18.1.2020.

Sustainable and transparent market and usage of real estates in accordance with EU standards lead to the faster economic development and increasing of investments.

The huge opportunity for GA in both entities is to provide the market actors on the real estate market with relevant and reliable information. Some of the benefits of implementing this kind of system are connected to: credit-market with lower interest for households, insurances with lower fees, secured investments, stability in fiscal income from taxation of properties etc.

Establishment of public and transparent Sales price register enables building of transparent land market as an ultimate prerequisite for creation of business environment which will attract investments and reduce possibility for corruption.

Although the establishment of updated and correct SPR itself is a very beneficial achievement it can be fully utilized only in case of comprehensive property tax reform in cooperation with Tax authorities. Property taxes are particularly valuable for developing countries. Determination of real estate value is more and more becoming a national need without which the market economy and efficient real estate management as well as handling numerous societies needs cannot be achieved. Implementing the European Parliament as well as EU Council the Mortgage Credit Directive EU countries have introduced the real estate (mass) valuation systems mainly for the purpose of fairer taxation of properties or real estate rights which will be also prerequisite for Bosnia and Herzegovina during the EU accession.

  • The overall long-term outcome for this component is:

Contribute to the establishment of stable and transparent property market which will lead to more secured investments and economic development.

  • Component direct outcome:

SPR data is used for implementation of pilot projects in order to develop a basis for policy making, strategic and methodology planning related to mass valuation and property tax reform in cooperation with direct stakeholders (GA, Tax Authorities and MoF).

Accomplishments 2013-2019

The activities on SPR practically started from the scratch, having in mind that this area was not regulated by existing legislative. No one had jurisdiction on SPR and it gives huge opportunity for GA in both entities to provide the market actors on the real estate market with relevant information. Having in mind completely different organization and working processes regarding SPR in the RS and FBH the activities have been conducted in two tracks. Complex working processes in FBH demanded close cooperation with Tax Authority and municipal administrations in order to obtain relevant data for SPR, satisfy stakeholders’ needs, organizations and cover entire business procedure. The dedicated work supported by Lantmäteriet’s and regional experts lead to the excellent results which significantly overcome project plans.

The most important results include:

  • Development of Sales Price Register IT system. Different organization and working processes in the RS and FBH were a big challenge for the contractor and testing teams. In the FBH it was necessary to work on customization in order to accommodate IT solution to the needs of two inevitable stakeholders in the process of valuation, Tax Authority and municipal commissions for property valuation. Nevertheless, the contractor, RGA, FGA and CILAP has managed to jointly develop two SPR IT solutions customized in accordance with the respective organization and business procedures,
  • The Law on the amendments on Law on Survey and Cadastre, and its articles which defines RGA jurisdiction for the establishment of SPR,
  • Rulebook on the content and conducting of the SPR in the RS,
  • The Agreement on cooperation between the FBH Tax Authority and FGA which defines terms for cooperation due to lack of legal framework, and ongoing process of signing individual agreements of FGA with each of the local government units
  • Full implementation of SPR in the RS is ongoing. The wide training campaign in February 2017 which included all RGA local offices has created needed prerequisites, and since then, all RGA local offices continuously work on the fulfilment of questionnaires and entering of sales price contracts’ data into the SPR IT system,
  • The SPR system is currently on use in 72 local self-government units, out of a total of 79 and in 76 tax offices, out of a total of 77 in the Federation of BH. Tax Authority and local self-government units are direct users of the developed SPR IT system,
  • More than 70 000 sales contracts in the SPR system,
  • Development of web applications – Public Access into the Sales Price Register Data of the Republic of Srpska and Public Access into the Sales Price Register Data of the FBH. The data from the sales contracts related to the price, area and type of real estate are publicly available since November 29, 2017 and June 5, 2018, respectively, increasing the transparency of the real estate market throughout realistic insight into the real estate market and its developments/ trends,
  • Reports on the volume of real estate market and prices in sales contracts are preparing on annual basis provoking huge public interest,
  • Involvement of new stakeholders to the SPR system in the RS, and the Public Attorney’s office and notaries. A joint working group consisted of RGA, CILAP and the Notary Chamber representatives will work on defining the procedures for entering the sales contracts and necessary data on real estate in the SPR software by the notaries, development of technical requirements for SPR software improvement and organizing joint seminars and trainings for notaries,
  • Presentation of results and activities on the SPR establishment was integral part of seminars that included representatives of various stakeholders from all FBH cantons and municipalities.

Phasing out 2020 - 2021

The activities during the phasing out will be focused on promotion of functionalization and usage of SPR data to enable future property tax reform. Conducting of pilot projects and studies will provide sufficient information, knowledge for policy making, strategic and methodology planning related to mass valuation and property tax reform to the direct stakeholders, Ministries of Finance and Tax Authorities.

Strong interinstitutional cooperation and clear definition of roles between Ministries of Finance, Tax Authorities, and GA is extremely important. An official working group will be formed with participants from all institutions. The activities will include consultants from the Swedish Tax authority. Additionally, the GA have identified the need for further strengthening of capacities regarding analysis of BH property market and intensification of collaboration with current and possible potentially new indirect partners that use or will make use of existing SPR products/services.

The component will initiate the fundamental tax reform which require political decisions at the highest level, and wide Embassy support is necessary.

  • Best practice and share of experience related to interinstitutional cooperation from Sweden regarding mass valuation activities (introduction to interinstitutional cooperation) - experts from LM and Swedish Tax authority
  • GA’s and TA capacity for performance of activities related to Property valuation is strengthened- experts from LM and Swedish Tax authority
  • Determination of valuation methodology and valuation model for residential market- experts from LM
  • Developed tools for property data analysis- Pilot GIS-CAMA-system for mass valuation pilot project - experts from LM
  • Pilot project resulted in Draft Work Plan for further implementation of mass valuation in FBiH and RS - experts from LM
  • Support to the preparation for development of institutional framework for mass valuation (policies, strategies, methodologies, manuals...) - experts from LM and Swedish Tax authority

In order to achieve component goals, the project partners will perform the following activities:

  • Support to the preparation for development of institutional framework for mass valuation (policies, strategies, methodologies, manuals).
  • Support analysis of the legal framework and preparation of recommendation for legal framework enhancement,
  • Support the assessment of existing property valuation organisational structure and give proposal for its improvement
  • Support the preparation for establishment of a legal framework related to the notarial chamber
  • Support to the promotion of good practises (entity, cantonal, municipality level)
  • Support to the SPR maintenance
  • Support to development of professional access for dissemination of SPR data
  • Interoperability of SPR with other applications (AR, PIS when available)
  • Support for co-operation and exchange of information via web services with TA in BH
  • Support in development and implementation of SPR with municipalities and the statistical office
  • Further strengthening of GA’s and TA capacity for performance of activities related to Property valuation
  • Analysis of property market in order to revaluate existing categorization of the properties
  • Selection of valuation methodology and valuation model for residential market
  • Carry out pilot activities on mass valuation within a selected pilot areas
  • Support in development and implementation of tools for property market data analysis
  • Define requirements for Pilot GIS-CAMA-system for mass valuation
  • Coordination with the policy makers and GA's stakeholders
  • Strengthen and expand cooperation with the Ministries of Finance and the Taxation Authorities
  • Organise workshops with the policy makers in order to raise awareness on the importance for the future mass valuation and property tax reform and on the needs for clarification of roles between different stakeholders in this process.
  • Disseminate results and promote benefits to GA's stakeholders through workshops and seminars

Expected outputs from activities are:

  • Management and staff of GA, TA and MoF have capacities to develop and propose appropriate legal and institutional framework for property tax reforms 
  • Professionals access to the SPR data via web services is developed
  • SPR system is available to users (GA, municipalities, TA) to conduct regular business processes
  • Interoperability of SPR with other applications is enabled
  • Web services are available
  • GA’s and TA capacity for performance of activities related to Property valuation is strengthened
  • Pilot project resulted in Draft Work Plan for further implementation of mass valuation in FBH and RS
  • Developed tools for property data analysis- Pilot GIS-CAMA-system for mass valuation
  • Raised awareness and closer cooperation of all participants involved in Real Estate Market
  • Raised awareness on benefits of mass valuation and property tax reform
Ključne reči: komponenta 3