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Reduced Tax On Rent

The Government has launched a new withholding tax on rent, whereby the rate of tax on income

from rented properties would be reduced from a maximum of 35% to 15%, tax evasion will be

discouraged, and government revenue will increase.

The 15% tax rate would be applicable to rented properties for residential purposes, including

garages. Both individuals and companies are eligible for this new reduced tax rate, which is

applicable on rental income earned as from 1st January 2014.

Once an individual or company declares the annual income from such rented property and gives

the required details in respect of the property, on the prescribed form to be attached with the

income tax return, the individual or company will pay a flat rate of 15% in tax on the total gross

rental income received.

The scheme is a voluntary one, meaning that the Government is allowing rental earners to opt to

retain the existing tax regime for rental income.

The Government is also giving the opportunity to individuals to regularise their tax position

with respect to previous years’ undeclared rents. To avail themselves of this opportunity such

individuals will have to declare income from rent for the period 2005-2012 and pay the 15% tax

on a two year averaged rental revenue received for the mentioned period of time. No interest or

penalties would be charged on such declarations.

Such tax and relative declarations are also to be made on a form prescribed for this purpose.

Should taxpayers, whether companies or individuals persist in not declaring income from rent,

or declare only part of their undeclared rental income, they will be obliged to pay the full 35%

tax rate, in addition to any penalties and interests, following an investigation carried out by tax

authorities.

Procedure to pay the 15% tax on rental revenue received during 2014

1. One is to file Form TA 24, which form can be downloaded from the website of the Inland

Revenue Department.

2. The person (individual or company) is to give the details of the rented properties and garages,

which properties and garages are being used for residential purposes. For each property and

garage the gross rental revenue is to be given.

3. The person is to calculate 15% of the rental revenue received as the tax due to the Inland

Revenue Department.

4. The duly filled and signed Form together with a cheque covering the amount of tax due is to

be sent to the Inland Revenue Department by latest 30th June of the following year. For the year

2014, it means that this Form and payment of tax is to be effected by latest 30th June 2015.

Procedure to declare any undeclared rental revenue received up to 2012

1. One is to file Form TA 24A, which form can be downloaded from the website of the Inland

Revenue Department.

2. The individual is to give the details of the rented properties and garages, which properties and

garages were rented for residential use. For each property and garage the gross rental revenue

received along the years is to be given.

3. The years which this information is needed refer to the years between 2005 and 2012.

4. The individual is to calculate the 15% of the rental revenue received, as described in the same

Form TA 24A.

5. The duly filled and signed Form together with a cheque covering the amount of tax due is to be

sent to the Inland Revenue Department by latest 30th June 2015.

Note: rental income received in 2013 should be or have been declared in the tax return for that

year and subject to the normal tax rates.