IRC considering repealing stamp duty on leases

A PROPOSAL to repeal the nominal stamp duty on leases is being considered by the Treasury Department, says Internal Revenue Commission (IRC) Commissioner-General Sam Koim.
He said lease agreements would still have to be lodged with the Stamp Duty office.
“This will allow the IRC to register lease arrangements for intel and data analytical purposes,” he said.
“By this amendment, not only will there be minimal impact on government revenue but the Government is offering relief to property owners (and) encouraging them to comply by paying tax on leases.
“The revenue foregone will be minimal.”
Annual stamp duty revenue collected from leases was K11,441 in 2018, K32,963 in 2019 and K86,211 (progressive) this year.
“As can be seen, GST on property leases has been very small compared to the properties being let,” he said.
“This is a reflection on the rate being very low, (and) the relative administrative costs are high.
“In addition, for a landlord leasing a property, their rent price plus GST plus stamp duties make the rents very uncompetitive, hence drives most to engage in evasive behaviour.”
Another proposal by IRC is for the developer of projects to remit and deduct prescribed royalties withholding tax directly to the commission.
The Income Tax Act provides for a prescribed royalty withholding tax at a 5 per cent rate on all royalties paid by developers to landowners.
At the moment, Koim said developers made royalty payments directly to a regulator who then paid the landowners and bears the final obligation of withholding and remitting the 5 per cent tax to the IRC.