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New Property Tax System - Examples

​A. Mr. X purchased a flat on the 30th June 2007, which he will be selling on the 15th June 2015. The notice of promise of sale was registered with the Office of the Commissioner for Revenue on the 6th September 2014.

Given that the notice of promise of sale was registered with the Office of the Commissioner for Revenue before the 17th November 2014 and the property is transferred not later than twelve years after the date of the acquisition thereof Mr. X has two options:

 

  1. Elect, by means of a declaration made to the notary at the time of the publication of the deed of the transfer to exclude the transfer from the final withholding tax system. In such case 7% provisional tax is paid at the time of publication of the deed and the gain or profit is to be declared in the tax return for year of assessment 2016.
  2. If no election is made the transfer will be subject to a final withholding tax of 8% on the transfer value to be collected by the notary at the time of the publication of the deed of the transfer.

 

B. Mr. X purchased a flat on the 30th June 2007, which he will be selling on the 15th June 2017. The notice of promise of sale was registered with the Office of the Commissioner for Revenue on the 6th September 2014.

Given that the property will be transferred after the 31st December 2015 even though the notice of promise of sale was registered with the Office of the Commissioner for Revenue before the 17th November 2014 and the property is transferred not later than twelve years after the date of the acquisition thereof Mr. X cannot elect to exclude the transfer from the final withholding tax system. The transfer will be subject to a final withholding tax of 8% on the transfer value to be collected by the notary at the time of the publication of the deed of the transfer.

C. Mr. X purchased a flat on the 30th June 2007, which he will be selling on the 15th June 2015. The notice of promise of sale was registered with the Office of the Commissioner for Revenue on the 15th December 2014.

Given that the notice of promise of sale was registered with the Office of the Commissioner for Revenue after the 17th November 2014 the transfer cannot be excluded from the final withholding tax system and the transfer will be subject to a final withholding tax of 8% on the transfer value to be collected by the notary at the time of the publication of the deed of the transfer.

D. Mr. X purchased a flat on the 30th June 2011, which he will be selling on the 15th June 2015. The notice of promise of sale was registered with the Office of the Commissioner for Revenue on the 6th September 2014.

Given that the notice of promise of sale was registered with the Office of the Commissioner for Revenue before the 17th November 2014 and the property is transferred not later than twelve years after the date of the acquisition thereof Mr. X has two options:

 

  1. Elect, by means of a declaration made to the notary at the time of the publication of the deed of the transfer to exclude the transfer from the final withholding tax system. In such case 7% provisional tax is paid at the time of publication of the deed and the gain or profit is to be declared in the tax return for year of assessment 2016.
  2. If no election is made the transfer will be subject to a final withholding tax of 5% on the transfer value to be collected by the notary at the time of the publication of the deed of the transfer. The 5% rate applies because the transfer is made not later than five years after the date of the acquisition of the property.

 

E. Mr. X purchased a flat on the 30th June 2011, which he will be selling on the 15th June 2015. The notice of promise of sale was registered with the Office of the Commissioner for Revenue on the 15th December 2014.

Given that the notice of promise of sale was registered with the Office of the Commissioner for Revenue after the 17th November 2014 the transfer cannot be excluded from the final withholding tax system and the transfer will be subject to a final withholding tax of 5% on the transfer value to be collected by the notary at the time of the publication of the deed of the transfer. The 5% rate applies because the transfer is made not later than five years after the date of the acquisition of the property.

F. Mr. X purchased a flat on the 30th June 2002, which he will be selling on the 15th June 2015. The notice of promise of sale was registered with the Office of the Commissioner for Revenue on the 6th September 2014.

Mr. X cannot elect to exclude the transfer from the final withholding tax system because the transfer is made later than 12 years after the date of the acquisition of the property. The transfer will be subject to a final withholding tax of 12% on the transfer value to be collected by the notary at the time of the publication of the deed of the transfer. The 12% rate applies because property was acquired before the 1st January 2004 and the notice of promise of sale was registered with the Office of the Commissioner for Revenue before the 17th November 2014.

G. Mr. X purchased a flat on the 30th June 2002, which he will be selling on the 15th June 2015. The notice of promise of sale was registered with the Office of the Commissioner for Revenue on the 15th December 2014.

Mr. X cannot elect to exclude the transfer from the final withholding tax system because the notice of promise of sale was registered with the Office of the Commissioner for Revenue after the 17th November 2014. The transfer will be subject to a final withholding tax of 10% on the transfer value to be collected by the notary at the time of the publication of the deed of the transfer. The 10% rate applies because property was acquired before the 1st January 2004 and the notice of promise of sale was registered with the Office of the Commissioner for Revenue after the 16th November 2014.

H. Mr. X purchased a flat on the 31st December 2003, which he will be selling on the 15th June 2015. The notice of promise of sale was registered with the Office of the Commissioner for Revenue on the 6th September 2014.

Given that the notice of promise of sale was registered with the Office of the Commissioner for Revenue before the 17th November 2014 and the property is transferred not later than twelve years after the date of the acquisition thereof Mr. X has two options:

 

  1. Elect, by means of a declaration made to the notary at the time of the publication of the deed of the transfer to exclude the transfer from the final withholding tax system. In such case 7% provisional tax is paid at the time of publication of the deed and the gain or profit is to be declared in the tax return for year of assessment 2016.
  2. If no election is made the transfer will be subject to a final withholding tax of 12% on the transfer value to be collected by the notary at the time of the publication of the deed of the transfer. The 12% rate applies because property was acquired before the 1st January 2004 and the notice of promise of sale was registered with the Office of the Commissioner for Revenue before the 17th November 2014.

 

NOTE: Examples A to H above also apply in the case where the transferor is a company; however the reduced 5% final withholding tax rate referred to in example D above applies if the transfer of property does not form part of a project.

I. Company X purchased land on the 31st December 2008, which was developed into 20 units for resale. 10 of these units forming part of the project that have been sold by the 31st December 2014 have all been subject to 12% final withholding tax since the owner did not elect to exclude the first transfer from the final withholding tax system. A notice of promise of sale was registered with the Office of the Commissioner for Revenue before the 17th November 2014 in respect of 5 unsold units. Company X will be transferring the remaining 10 units in 2015.

The 5 units in respect of which a notice of a promise of sale has been given to the Office of the Commissioner for Revenue before the 17th November, 2014 will remain subject to 12% final withholding tax on the transfer value.

The other 5 units in respect of which a notice of a promise of sale has not been given to the Office of the Commissioner for Revenue before the 17th November, 2014 will be subject to 8% final withholding tax on the transfer value.

J. Company X purchased land on the 31st December 2001, which was developed into 20 units for resale. 10 of these units forming part of the project that have been sold by the 31st December 2014 have all been subject to 12% final withholding tax since the owner did not elect to exclude the first transfer from the final withholding tax system. A notice of promise of sale was registered with the Office of the Commissioner for Revenue before the 17th November 2014 in respect of 5 unsold units. Company X will be transferring the remaining 10 units in 2015.

The 5 units in respect of which a notice of a promise of sale has been given to the Office of the Commissioner for Revenue before the 17th November, 2014 will remain subject to 12% final withholding tax on the transfer value.

The other 5 units in respect of which a notice of a promise of sale has not been given to the Office of the Commissioner for Revenue before the 17th November, 2014 will be subject to 10% final withholding tax on the transfer value. The 10% rate applies because the land was acquired before the 1st January 2004.

K. Company X purchased land on the 31st December 2008, which was developed into 20 units for resale. 10 of these units forming part of the project that have been sold by the 31st December 2014 have all been subject to 35% tax on the profit since the owner elected to exclude the first transfer from the final withholding tax system. A notice of promise of sale was registered with the Office of the Commissioner for Revenue before the 17th November 2014 in respect of 5 unsold units. Company X will be transferring the remaining 10 units in 2015.

The 5 units in respect of which a notice of a promise of sale has been given to the Office of the Commissioner for Revenue before the 17th November, 2014 will remain subject to 35% tax on the profit.

The other 5 units in respect of which a notice of a promise of sale has not been given to the Office of the Commissioner for Revenue before the 17th November, 2014 will be subject to 8% final withholding tax on the transfer value.

L. Company X purchased land not situated within a special designated area on the 31st December 2003, which was developed into 20 units for resale. 10 of these units forming part of the project that have been sold by the 31st December 2014 have all been subject to 35% tax on the profit since the owner elected to exclude the first transfer from the final withholding tax system. A notice of promise of sale was registered with the Office of the Commissioner for Revenue before the 17th November 2014 in respect of 5 unsold units out of which 3 will be transferred before the 31st December 2015 and the other two will be transferred during 2016. The remaining 5 units in respect of which a notice of promise of sale was not registered with the Office of the Commissioner for Revenue are expected to be sold during 2016.

The 3 units in respect of which a notice of a promise of sale has been given to the Office of the Commissioner for Revenue before the 17th November, 2014 will remain subject to 35% tax on the profit since these will be sold during 2015 i.e. sold before the 12 year period from date of acquisition of the land has elapsed.

The 2 units in respect of which a notice of a promise of sale has been given to the Office of the Commissioner for Revenue before the 17th November, 2014 will be subject to 12% tax on the transfer value since these will be sold after the 31st December 2015 i.e. after the 12 year period from date of acquisition of the land has elapsed. The 12% rate applies because the land was acquired before the 1st January 2004 and the notice of promise of sale was registered with the Office of the Commissioner for Revenue before the 17th November 2014.

The remaining 5 units in respect of which a notice of promise of sale was not registered with the Office of the Commissioner for Revenue will be subject to 10% tax on the transfer value since the land was acquired before the 1st January 2004.

M. Company X purchased land situated within a special designated area on the 31st December 2003, which was developed into 20 units for resale. 10 of these units forming part of the project that have been sold by the 31st December 2014 have all been subject to 35% tax on the profit since the owner elected to exclude the first transfer from the final withholding tax system. A notice of promise of sale was registered with the Office of the Commissioner for Revenue before the 17th November 2014 in respect of 5 unsold units out of which 3 will be transferred before the 31st December 2015 and the other two will be transferred during 2016. The remaining 5 units in respect of which a notice of promise of sale was not registered with the Office of the Commissioner for Revenue are expected to be sold during 2016.

The 5 units in respect of which a notice of a promise of sale has been given to the Office of the Commissioner for Revenue before the 17th November, 2014 will remain subject to 35% tax on the profit irrespective of when they are sold.

The remaining 5 units in respect of which a notice of promise of sale was not registered with the Office of the Commissioner for Revenue will be subject to 10% tax on the transfer value since the land was acquired before the 1st January 2004.

N. Company X purchased land not situated within a special designated area on the 1st January 2004, which was developed into 20 units for resale. 10 of these units forming part of the project that have been sold by the 31st December 2014 have all been subject to 35% tax on the profit since the owner elected to exclude the first transfer from the final withholding tax system. A notice of promise of sale was registered with the Office of the Commissioner for Revenue before the 17th November 2014 in respect of 5 unsold units out of which 3 will be transferred before the 2nd January 2016 and the other two will be transferred after the 1st January 2016. The remaining 5 units in respect of which a notice of promise of sale was not registered with the Office of the Commissioner for Revenue are expected to be sold after the 1st January 2016.

The 3 units in respect of which a notice of a promise of sale has been given to the Office of the Commissioner for Revenue before the 17th November, 2014 will remain subject to 35% tax on the profit since these will be sold during 2015 i.e. sold before the 12 year period from date of acquisition of the land has elapsed.

The 2 units in respect of which a notice of a promise of sale has been given to the Office of the Commissioner for Revenue before the 17th November, 2014 will be subject to 12% tax on the transfer value since these will be sold after the 1st January 2016 i.e. after the 12 year period from date of acquisition of the land has elapsed. The 12% rate applies because the notice of promise of sale was registered with the Office of the Commissioner for Revenue before the 17th November 2014.

The remaining 5 units in respect of which a notice of promise of sale was not registered with the Office of the Commissioner for Revenue will be subject to 8% tax on the transfer value since the land was acquired after the 31st December 2003.

NOTE: Examples I to N above also apply in the case where the transferor is an individual.

NOTE: Examples I to K above also apply in the case where the property is situated within a special designated area.

O. Company X purchased land situated within a special designated area before the 1st January 2004, which was developed into 20 units for resale. 10 of these units forming part of the project that have been sold by the 31st December 2014 have all been subject to 35% tax on the profit since the owner elected to exclude the first transfer from the final withholding tax system. A notice of promise of sale was registered with the Office of the Commissioner for Revenue before the 17th November 2014 in respect of 5 unsold units out of which 3 will be transferred before the 2nd January 2016 and the other two will be transferred after the 1st January 2016. The remaining 5 units in respect of which a notice of promise of sale was not registered with the Office of the Commissioner for Revenue before the 17th November 2014 are expected to be sold after the 1st January 2016.

The 5 units in respect of which a notice of a promise of sale has been given to the Office of the Commissioner for Revenue before the 17th November, 2014 will remain subject to 35% tax on the profit irrespective of when they are sold.

The remaining 5 units in respect of which a notice of promise of sale was not registered with the Office of the Commissioner for Revenue will be subject to 10% tax on the transfer value since the land was acquired before the 1st January 2004.

P. Company X purchased land on the 31st December 2008, which was developed into 20 units for resale. None of these units have been sold by the 31st December 2014 and no notice of a promise of sale has been given to the Office of the Commissioner for Revenue before the 17th November, 2014, in respect of these units.

The 20 units will be subject to 8% final withholding tax on the transfer value.

Q. Company X purchased land on the 31st December 2003, which was developed into 20 units for resale. None of these units have been sold by the 31st December 2014 and no notice of a promise of sale has been given to the Office of the Commissioner for Revenue before the 17th November, 2014, in respect of these units.

The 20 units will be subject to 10% final withholding tax on the transfer value since the land was acquired before the 1st January 2004.