Snapshot Of Singapore Budget 2009 Affecting Developers' Projects
March 2009 | Real Estate | Property Notes
Minister for Finance, Mr Tharman Shanmugaratnam, delivered the Budget Speech for the Financial Year 2009 in Parliament on 22 January 2009.1 He announced, among other things, measures to boost the property market2 which include the following measures affecting developers' projects:-
| (1) |
Deferment of property tax of up to two years for land which is approved for development.
| (a) |
To help ease cash-flow for developers (of all property types including commercial and industrial) which intend to develop vacant land but are holding back their developments that they had originally planned. |
| (b) |
"Land approved for development" will be defined as land with a valid Written Permission ("WP") or Provisional Permission ("PP") from the Urban Redevelopment Authority, and where the land sites are owned by companies. The deferral will only be given to business owners and exclude individuals, clans and associations |
| (c) |
Application for deferral is to be submitted to the Comptroller of Property Tax. The deferral will take effect from 22 January 2009, or from the date of WP or PP, or from the date of tax liability of the new owner (where the land is transferred after 22 January 2009 and there is a valid WP or PP as at the date of tax liability), whichever is the latest. |
| (d) |
The deferral will lapse on 21 January 2011, or upon Temporary Occupation Permit ("TOP"), or upon lapsing of the WP or PP (i.e. if the WP or PP is not renewed), or upon the liquidation, insolvency or bankruptcy of the developer, or upon sale of the property, whichever is the earliest. |
| (e) |
Developer must inform the Inland Revenue Authority of Singapore ("IRAS") within one month of the date of issue of TOP, or developer going into liquidation, insolvency or bankruptcy, or when the land is sold, failing which a penalty will be imposed.3 |
| (f) |
Upon expiry or revocation of the deferral period before 21 January 2011, developers are given one month to pay the tax in full, without demand. For deferral which terminates on 21 January 2011, developers are given till 31 January 2011 to pay the tax in full, without demand. Developers paying their property tax through GIRO can enjoy up to a maximum of twelve months interest-free instalments. |
|
| (2) |
Government to allow a one-year extension of the project completion period ("PCP").
| (a) |
To give further flexibility to developers holding Qualifying Certificates ("QCs") to delay the physical completion and sale of their existing projects in accordance with market conditions. |
| (b) |
Developers of uncompleted Government residential sale sites (where no unit has been sold) allowed to apply for a one-year extension of the PCP without having to pay an extension premium.4 |
| (c) |
For Government residential sale sites with some sold units, the PCP will only be extended up to the date of delivery of vacant possession of the sold units as stipulated in the sale & purchase agreement. |
| (d) |
Similarly, developers of existing private residential projects allowed to apply for a one-year extension of the PCP or up to the date of delivery of vacant possession, whichever is earlier. |
| (e) |
All applications to be made by 21 January 2010. |
|
| (3) |
Government to extend the period for developers with QCs to dispose of all residential units in their developments, from two years to four years (from the date of issue of TOP).
| (a) |
Developers also allowed to rent out unsold residential units during this period for a maximum of four years (from the date of issue of TOP or the date of application, whichever is later). |
|
| (4) |
Government to allow re-assignment of Government sale sites and private land owned by foreign developers.
| (a) |
Only one re-assignment will be allowed for each site and the purchaser taking over the land will not be allowed to further re-assign the land. |
| (b) |
For Government sale sites, re-assignment by way of disposal of the land or disposal by the controlling shareholder of all his interest in the company. For private land, re-assignment by way of disposal of the land or disposal of all the shareholders' shares in the QC holder. |
| (c) |
Transaction must not be of a speculative nature. |
| (d) |
All applications to be made by 21 January 2010. |
|
1 The full text from the Budget Speech and its Annexes can be found at http://www.singaporebudget.gov.sg/index.html.
2 More details of assistance measures for the property market can be found at http://app.mof.gov.sg/news_press/pressdetails.asp?pressID=353.
3 IRAS Circular on "Property Tax Deferral for Land Approved For Development (Budget 2009)" published on 22 January 2009. It can be found at http://www.iras.gov.sg/irasHome/uploadedFiles/Quick_Links/e-Tax_Guides/Property/CIRCULARLAND.pdf.
4 The PCP of Government residential sale sites and private residential sites developed by QC holders are currently specified as six years for most sites.
