Technical Update

Pursuant to the government’s decision during the 19th Government-Private Sector Forum, this notification was issued by the Ministry of Economy and Finance (MEF) to notify the general public of the following:

I. Stamp Duty (SD) exemption on the transfer of immovable property

II. Capital Gains Tax (CGT)

Continue to delay the implementation of the Capital Gains Tax (CGT) on six types of capital gains including tax on gains from immovable properties, leases, investment assets, goodwill, intellectual property and foreign currencies until the end of 2024.

III. Tax on Immovable Properties

IV. Tax on Unused Land

The implementation of the Tax on Unused Land shall be delayed until the end of 2024. For purposes of implementation from 2025 onwards, the MEF will issue tax regulations to reduce the criteria for tax exemption based on the following premises:

1. Land that is subject to Tax on Unused Land refers to the land outside the taxable area on immovable properties.

2. Land that is subject to Tax on Unused Land shall be reduced by 5 hectares per site.

3. Land with more than 5 hectares shall be exempt from Tax on Unused Land in accordance with any of the following conditions:

• Agricultural land that is currently cultivated with the approval of the committee or sub-committee of land valuation for Tax on Unused Land

• Land that is currently used for the economic activities of a physical person or legal person that has been registered with the GDT

• Land, with or without construction, under a lease agreement

• Land that is in the possession of the Royal Government or government institutions

• Land under economic concession which is leased from the state, or community land

• State-owned land which is leased to any physical person or legal person for other economic activity as per contract or as per agreement between the two parties

• Land in a Special Economic Zone that directly serves agricultural, industrial, and/or service activities

• Land that has been registered as an asset of an enterprise in the field of education and vocational training serving the educational and vocational training purpose of the enterprise. In case that this land has been sold or does not serve the above purpose, tax obligations shall be fulfilled as per the prevailing laws in force.

All the above-mentioned tax exemptions, reliefs, delays, and suspensions shall not be applicable to taxes, including administrative penalties, that have already been paid.

Our comments

It can be observed that the real estate industry is one of the adversely impacted sectors brought by COVID-19. Hence, these tax exemptions, reliefs, delays, and suspensions provided by the government will not only ease the tax burdens on property owners and real estate investors but will also stimulate economic growth in the real estate market. However, to be eligible for the above-mentioned benefits, taxpayers must ensure that they meet the stated conditions and have sufficient documentation to justify their case.

In addition, the further delay in the implementation of the CGT regime by 2025 presents an opportunity for impacted taxpayers to conduct tax planning strategies and business restructuring exercises to minimize the impact of this new tax regime in the future. Impacted taxpayers should initiate a discussion on this matter with their trusted advisors.  

The GDT issued this Instruction to clarify that the validity of the DTA incentives, in all cases, shall be effective for one whole year from 1st January of the current tax year.

Taxpayers must apply for DTA benefits and ensure full compliance with the relevant tax laws and regulations before receiving approval from the GDT.

Our comments

Previously, for first-time applications, DTA incentives were generally effective from the date of approval up to the end of the calendar year. Hence, taxpayers were not able to fully enjoy the DTA incentives if the DTA certificates were granted during the later part of the year. This new instruction will allow taxpayers to avail of the DTA incentives for a full year, once the DTA approval is granted by the GDT. However, taxpayers may need to revisit, and if needed, amend the tax declarations that were filed prior to obtaining the DTA approval to apply the DTA benefit of reduced tax rate.

To maximize the available DTA incentives, taxpayers are recommended to take early actions in submitting DTA requests while ensuring proper compliance with the prevailing laws and regulations to obtain a favourable response from the GDT. 

The GDT has issued this Instruction to provide guidance on the procedures for the online amendment of monthly tax declarations. To ensure effective implementation, the GDT detailed the following procedures: 

After the submission of the request form, the GDT will either approve or reject the request and taxpayers can receive the official response from the GDT via the e-Filing system. Taxpayers can also check the status of the amendment request by using the mobile application “GDT Check & Track” by scanning the QR code on the request form.

Our Comments

This online amendment process introduced by the GDT marks a commendable move towards efficiency as it streamlines the inconvenient process of manually submitting the request letter to the GDT. This will also encourage taxpayers to conduct self-review and voluntary amendments to their tax declarations as they can now navigate the amendment process with greater ease and efficiency.

In light of this new Instruction, taxpayers are highly recommended to conduct a self-review of their tax compliance process (e.g., doing a tax health check, tax process review, etc.) to identify areas which need further improvement. Amendment of the impacted monthly tax declaration should be considered, as necessary.

As committed tax advisors to our clients, we welcome any opportunities to discuss the relevance of the above matters to your business.