Rent exempted from OB

September 26, 2011 7:49 AM

The long-term renting of houses will be exempted from sales tax.

This is one of the suggestions in an amendment proposal from the MFK on the tax plan, which the Parliament adopted yesterday. It regards a simplification of the manner in which the law regulates this point, according to Dean Rozier, MFK party-chairman in the Parliament.

Rozier’s proposal was submitted last night and immediately received backing from a majority of the parliament. In a commentary, Rozier states the current formulation in the law could lead to many discussions. He emphasizes that it shouldn’t make a difference who the owner is for those wanting to rent a house. According to the Parliament member, depending on who the owner is of a house, there could be a question of an OB-obligation in the original formulation. Rozier thinks this is an undesired development, because living in a house should be exempted from sales tax. However, the exemption only applies for long-term rent and the lessee will not charge the tenant of the house in question the sales tax.

The amendment also mentions the expansion of the repentance arrangement. At this moment, the repentance arrangement can only be used for payments of income tax. The proposal from the MFK-party, which the Parliament adopted, departs from the fact that income from the tax on profits and succession tax qualifies for the repentance arrangement. According to Rozier, more people could then make use of the repentance arrangement, thus generating more revenues for the treasury. The amendment also mentions deleting the word ‘off shore corporations’ and ‘off shore banks’ in the National Regulation sales tax and rather describe such as the international financial sector. This decision was prompted by the fact that the word ‘off shore’ has become an undesired internationally.

The amendment also expands the term for the declaration of sales tax. At this moment, one is to declare the OB on a monthly basis. However, the MFK-proposal adopted yesterday, offers the possibility to declare such on the period of one year at the most. The adjustment to the tax plan encompasses a different layout of the exemption stipulation for the Special Purpose Foundation (SPF) to prevent abuse and the participation exemption for target capitals.

16 September 2011