Commercial properties such as hotels, restaurants and tourist attractions need not pay property taxes for 2020 as part of Covid-19 aid

A property tax rebate of 30 per cent for 2020 will also be granted for all other non-residential properties, such as offices and industrial properties. ST PHOTO: KELVIN CHNG

SINGAPORE - Owners of commercial properties that have been badly affected by the coronavirus outbreak will not need to pay property taxes for 2020.

Such properties include hotels, serviced apartments, tourist attractions, shops and restaurants, said Deputy Prime Minister Heng Swee Keat in Parliament on Thursday (March 26) as he announced a Supplementary Budget to combat the worsening Covid-19 outbreak.

The property tax rebate, after enhancement, would cost the Government about $1.8 billion in total, the Ministry of Finance told The Straits Times yesterday. About 60,000 properties would be eligible for the 100 per cent property tax rebate, of which about 400 are hotels.

According to the ministry, this is the first time the Government has given a 100 per cent property tax rebate for qualifying commercial properties.

The move, which is a big step up from the 15 per cent to 30 per cent property tax rebates announced in last month's Budget, is meant to help landlords with business costs during the economic downturn.

"Where the cost is within the Government's control, we will do our best to help," said Mr Heng, who is also Finance Minister.

A property tax rebate of 30 per cent for 2020 will also be granted for all other non-residential properties, such as offices and industrial properties.

In announcing the $48 billion Supplementary Budget on Thursday, Mr Heng urged landlords to fully pass on the rebate to tenants, such as by reducing rentals to ease tenants' cash flow and cost pressures.

"Many businesses have pointed out that it will be a lose-lose situation if landlords do not support their tenants. After all, if tenants fail, the properties will be empty.

"So my message to landlords is: Do your part, chip in, and give additional help to tenants who are more badly hit," he said.

This comes after some tenants and associations pointed out that the earlier round of rebates were not passed on by their landlords.

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The Restaurant Association of Singapore, for instance, said that not all food and beverage operators have seen the rental rebates promised by landlords.

Retail and food and beverage spaces were granted a 15 per cent rebate at the Budget statement last month. Properties such as hotels, serviced apartments and convention venues were given a rebate of 30 per cent.

In response, Minister for Trade and Industry Chan Chun Sing said in Parliament earlier this month that while some landlords "have proactively gone out of their way to share the rebates", others "are still taking a bit of time to roll out their packages".

The 100 per cent property tax rebate for retail malls is sufficient to offset half a month's rental rebate for tenants for up to three months, said Ms Tricia Song, head of research for Singapore, Colliers International.

But many retailers rely on landlords to pass on the rebates.

SPH Reit said it will fully pass on its property tax rebate "in a targeted manner" to tenants adversely impacted by the pandemic.

The reit manager's board will also be taking a 10 per cent cut of their directors' fees "in a show of solidarity with the community". SPH Reit chief executive Susan Leng will take a pay cut of 10 per cent, while other senior staff will take pay cuts of 5 per cent. The cuts will be effective from April and will be reviewed at the end of the year.

Mapletree Commercial Trust said it will fully pass on the property rebates to eligible tenants. On Thursday, the trust also rolled out an additional $18 million of rental relief for tenants, on top of a $11 million package it announced on Feb 24.

Its tenants will also be offered a deferment of payment for the fixed rent for April 2020 "to further ease their cash flow". The measures will help its retail tenants offset a total of about two months of rent, said Ms Sharon Lim, chief executive of Mapletree Commercial Trust Management.

The extension of property tax rebates to office and industrial properties should offer landlords some reprieve.

"They have been incurring costs to implement temperature screening and social distancing. They are also expected to be more flexible in lease negotiations and help tenants contain costs," said Ms Tay Huey Ying, head of research and consultancy at JLL Singapore.

For office and industrial properties, the 30 per cent property tax rebate works out to be 36 per cent of a month's rental, said Ms Christine Li, head of research for Singapore and Southeast Asia at Cushman & Wakefield.

Ms Kwee Wei-Lin, president of Singapore Hotel Association, described the Supplementary Budget as "the lifeline for Singapore's hotel industry."

The association represents 158 hotels here, which hire more than 40,000 workers. Ms Kwee said the property tax waiver makes a "huge difference to the bottom line", given that tourism demand is almost non-existent. "Although there were staycations and local F&B patronage, this incremental revenue stream disappeared with the new social distancing measures," she added.

Dr Kevin Cheong, executive director of Sentosa 4D AdventureLand, said that property tax makes up 5 per cent of his firm's operating costs and cashflow. The property tax rebate will go hand in hand with the job support measures announced on Thursday to help the company through this period, he said.

Mr Heng had announced that the Government will subsidise wages of local workers under the Job Support Scheme, with firms in the tourism sectors receiving 75 per cent of wages.The support will apply to the first $4,600 of gross monthly wages per local employee.

For the past week after March school holidays, visitor attractions are down more than 90 per cent from the same period in 2019. There are some experiencing more than 95 per cent drop in footfall.

Property tax exemptions will reduce overhead costs for the meetings, incentives, conferences and exhibitions (MICE) industry, said Singapore Association of Convention and Exhibition Organisers and Suppliers (Saceos).

Deferring income tax payments for three months will relieve immediate pressure on cash flow, while changes to the enterprise financing scheme including increased credit limits and deferred payment schedules also help, said Saceos President Aloysius Arlando.

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