As announced in Budget 2020, the tourism sector will get a property tax rebate of 30% for 2020, specifically for the accommodation and function room components of licensed hotels and serviced apartments, as well as prescribed Meetings, Incentives, Conferences and Exhibitions (MICE) venues. Qualifying commercial properties will also get a 15% property tax rebate, of which the government urges landlords to pass onto tenants. However, no rebate shall be given to any premises or a part of any premises used for any residential, industrial or agricultural purpose, or as an office, a business or science park, or a petrol station.

In tandem with the government’s Budget 2020 announcement, Inland Revenue Authority (IRAS) has swiftly published an IRAS e-Tax Guide titled Property Tax Rebate for Qualifying Commercial Properties – Budget 2020. According to IRAS, owners of qualifying commercial properties will be informed of their property tax rebates by 30 April 2020. While owners are not required to submit any claims for the rebate, they are welcome to contact IRAS if they do not receive any notice for the rebate despite the property they own falling under the qualifying commercial properties. Of particular interest to the landlords of retail properties is Section 3.2(b)(iii) which specifies that a 15% rebate will be accorded to shops (e.g. retail and F&B), including those within hotels, serviced apartments, and the prescribed MICE venues of Suntec Singapore Convention & Exhibition Centre, Singapore EXPO and Changi Exhibition Centre. While both the government’s and IRAS’ swift initiatives should be applauded, there remains a few other wish lists and concerns amongst property tax payers.Savills, as the property tax consultant to several of the largest landlords in Singapore, has received numerous queries pertaining to the criteria of qualifying commercial properties.

It will be good if additional clarification can be shed by IRAS on the properties that fall under the ambit of qualifying commercial properties. At this juncture, there appears to be some concerns amongst landlords on whether all the retail units within their buildings will qualify for the rebate. For instance, will a banking hall or co-working space within a retail podium fall under the scope of qualifying commercial property? Other grey areas include shops situated within office buildings and shophouses. So, what exactly is the criteria? These are valid concerns as landlords have been inundated with queries from anxious tenants who are waiting for the tax reliefs to be passed to them. It will be ideal if IRAS’ qualifying criteria for commercial properties are as generous as possible in the context of the present difficult times.

The effects of COVID-19 has undoubtedly widened beyond the hospitality, tourism, retail and food and beverage sectors. For instance, office and industrial landlords experience higher operational costs and the latter will experience pressure from their tenants due to the slowing down of manufacturing activities. In line with spirit of rendering assistance and kick-starting the ailing economy, it will be ideal if the government could cast the property tax relief net far wider, with an extension to the office, industrial and residential sectors. Are we likely to see a possible reintroduction of vacancy allowance by IRAS too? This will alleviate the occupancy pressures faced by landlords significantly.