accountinglads
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An Ad Valorem Tax is a tax on the value of an item that has been evaluated, e.g. real estate or personal property. This payment is determined as a percentage of the value of an item. An example is that in case a house is valued at 200,000 dollars and the tax rate is 1.5, the owner spends 3,000 a year. This system is proportional and fair as the taxes are in terms of value of the assets, and not a fixed rate. It is primarily relied on by governments to collect property tax, vehicle registration, and import duties to ensure that tax collection is in line with the change in asset values over time.