The circuit breaker measures necessary for breaking the chain of Covid-19 transmission came into effect on April 7. The unprecedented closure of workplaces and shops has, however, pushed many businesses into uncharted territory.
The Government has moved swiftly to alleviate the concerns of businesses. This includes passing legislation to ensure that the property tax rebates flow to the tenants of non-residential properties (Landlords must pass on rebates to tenants in timely manner, April 8)
It is laudable that the Government is helping businesses most directly affected by the pandemic.
At a more general level, it is common market practice for landlords of large properties to give rental rebates to attract new tenants, retain existing tenants or support tenants in a declining rental market. In fact, the giving of rental rebates by the landlords indicates a lower market rental level.
Therefore, while the rent - gross rent before rental rebates - set out in tenancy agreements may remain unchanged in a declining rental market, the effective rent payable by the tenants, after rental rebates, would invariably be lower than the rent signed.
However, the practice of the Inland Revenue Authority of Singapore is typically to disregard rental rebates and rely instead on the signed rents in determining the annual value of properties.
The resultant effect is a higher annual value and higher property tax.
Sheryl Lee Shu Yi