Summary of Responses - Public Consultation on Draft Property Tax (Amendment) Bill 2013

Eight Suggestions received on the Draft Property Tax (Amendment) Bill 2013

The Ministry of Finance (MOF) received eight suggestions on the draft Property Tax (Amendment) Bill 2013 during a public consultation held from 25 July to 14 August 2013. The eight suggestions are not accepted for implementation as they are inconsistent with the policy objectives of the proposed legislative changes.

Draft Property Tax (Amendment) Bill 2013

2. The draft Property Tax (Amendment) Bill 2013 contains the proposed legislation to put into effect two tax changes announced at Budget 2013, namely:

a) to remove property tax refund for unoccupied residential and non-residential properties with effect from 1 January 2014 to ensure consistency in the tax treatment of all vacant properties and to align with the policy intent of property tax, which is to tax property wealth rather than use;

b) to clarify the definitions of residential properties versus non-residential properties to enable the introduction of the progressive property tax structure on all residential properties from 1 January 2014.

3. In addition, there is one proposed amendment to extend the deadlines for filing objections and appeals on property tax assessments from the current 21 days to 30 days.

4. Of the eight suggestions received, six were related to the removal of the property tax refund for unoccupied properties, while two were related to the definition of residential and non-residential properties.  A summary of the key feedback received and MOF’s responses are as follows:

Removal of property tax refund for unoccupied residential and non-residential properties

(a) Feedback: Instead of removal of property tax refund, to lower property tax rate on properties or allow vacancy refund, albeit with a cap on the vacancy refund claim period, so as to reduce business costs of commercial and industrial property owners whose premises are vacant. To also consider allowing vacancy refund to vacant properties owned by Singaporeans residing abroad due to work or for charitable causes.

MOF’s response: Not accepted. Property tax is a tax on the ownership of properties and is levied irrespective of whether the property is occupied or vacant. The removal of vacancy refund will ensure consistency and equity in tax treatment. The feedback is not in line with the policy intent of property tax, which is to tax property wealth rather than use.

(b) Feedback: To commence building assessment for property tax only after a project reaches a certain occupancy rate or two years from Temporary Occupation Permit (TOP), whichever is earlier.

MOF’s response: Not accepted. Property tax is a tax on the ownership of properties and should be consistently levied irrespective of whether the property is occupied or vacant. Landlords may source for tenants before the date of TOP so that rentals can start at the earliest possible date.
 
Differentiation of treatment for residential property and non-residential property to enable the introduction of the progressive property tax structure on residential properties

(c) Feedback: To impose a separate and higher income tax rate for rental income earned on multiple properties owned for investment purposes.

MOF’s response: Not accepted. Given the progressivity of the income tax structure, an individual will pay more taxes as his total income, including his rental income and other incomes, increases. This is because he would be subject to a higher tax rate with a higher total income. Non owner-occupied properties are also subject to higher property tax rates.

5. MOF would like to thank all respondents for their comments.

MINISTRY OF FINANCE
DATE: 3 SEPTEMBER 2013