Second Reading Speech by Second Minister for Finance Lawrence Wong on COVID-19 (Temporary Measures) Bill, on 7 Apr 2020 at Parliament
COVID-19 (Temporary Measures) Bill
Second Reading Speech
7 April 2020
Part 6: Temporary Measures Concerning Remission of Property Tax
1. Mr Speaker, Sir, let me elaborate on Part 6 of this Bill, which introduces an obligation on property owners to pass on the prescribed property tax rebate received to their tenants, in the form of monetary payment or reduction in rentals, in a timely manner. Published on : 07 Apr 2020
Why the need to impose an obligation on property owners in this Bill
2. To help businesses affected by the COVID-19 pandemic, the Government introduced a property tax rebate for non-residential properties, as announced in the 18 February 2020 Budget and the 26 March 2020 Supplementary Budget. Owners of such properties are granted a property tax rebate of 30%, 60% or 100%, depending on the nature of the property, for 2020. The policy intent of the property tax rebate is to help the business operator affected by the COVID-19 pandemic. Hence the Government had strongly urged property owners to pass down the rebate to their tenants.
3. Let me first, before elaborating on the obligation, explain how our system of property tax works. In many cases, one property will be covered under one property tax account. But there are also many other cases, where with one property there are multiple accounts, for example a retail mall would have multiple property accounts because a shop within the mall, like a retail store or restaurant, would be accounted for under a single property tax account. In total, the 2020 property tax rebate will cover about 135,000 property tax accounts, including 33,000 property tax accounts for about 360 retail malls.
4. The Government fully appreciates the property owners who have or are in the process of fully passing on the rebate to their tenants either by making cash payments, or by reducing rentals. In some instances, property owners have gone further, to reduce rentals by an amount that is greater than the quantum of the rebate. In so doing, they have taken a step further to help their tenants and share the burden during this time of uncertainty.
5. However, the Government has also received feedback, particularly from tenants, that there are property owners who have not yet passed on the rebate to them. And just to set things in perspective, a 100% property tax rebate will work out to slightly more than one month of rent for most properties. So, the provisions in this Bill ensure that property owners who have not passed on the rebate fully will have to do so.
What the obligation is for property owners
6. Specifically, the Bill requires the property owner to pass on the full amount of property tax rebate attributable to a rented property to his tenant, in a timely manner. We will require the property owner to pass on the rebate by making a cash payment to his tenant, or by reducing or offsetting future rental payments. Property owners are also prohibited from imposing conditions when passing on the rebate. The property owner must keep records that he has so passed on the benefit, and when he has done so. Failure to properly pass on the rebate, or to keep a proper record, is also an offence.
7. For instance, if a property tax account is for a property wholly rented out to a tenant for the whole of 2020, the property owner should pass on the full sum of the rebate he received, as the rebate is entirely attributed to a rented space.
8. The Bill also provides the property owner or the property owner’s tenant with an avenue of redress should there be any dispute as to whether the owner has properly passed on the benefit, or whether the provisions apply to the property owner. The owner or his tenant may apply to a Valuation Review Panel, which will adjudicate disputes between the owner and the tenant. Any dispute relating to the transfer of the property tax rebate granted this year, must be brought to the Panel by 31 December 2021. The Panel will then determine if the property owner has indeed passed on the rebate fully to his tenants in the required manner by the required timelines. The Panel may make further directions for compliance by the owner. A determination and any further directions of a Valuation Review Panel are appealable to the High Court if they involve questions of law, or mixed law and fact.
9. Further details of the pass-through of the property tax rebate to tenants will be provided under the subsidiary legislation and on the website of the Inland Revenue Authority of Singapore.
10. Mister Speaker, Sir, the Government urges all property owners to support their tenants through this difficult time, and with this Bill, we require all property owners to do their part. Beyond the legal requirements, we call on all stakeholders, be it landlords or tenants, to really come together in the spirit of SGUnited, so we can work together and overcome the impact of COVID-19 together.