Developers get another year before duty loophole closes
(CNS): Amendments to the Stamp Duty Law passed in the Legislative Assembly in November to close a loophole will now not be closed until the end of this year, according to the final legislation posted on the government’s gazette last month. Developers use this loophole to help buyers dodge paying duty on buildings and only pay stamp duty on the land on which they develop. The amendment passed in November increased concessions for Caymanians buying their first home or land but also sought to address the problem of government’s duty losses in “linked property transactions”, which Finance Minister Roy McTaggart said could be recovered and used for public infrastructure projects.
But for one more year, developers can continue the practice of selling land to buyers and tying the purchaser to using them to construct the property while avoiding the duty on the actual home when it’s finished. Government had said this situation, whereby stamp duty is only paid on the value of the raw land and not the finished home, had resulted in significant revenue loss. It has nevertheless opted to leave the loophole open.
The previous amendment had identified 1 January 2019 as the date when the two contracts that form a linked property transaction would be assessed on the aggregate value of the contracts. But now, the actual implemented amendment has pushed the date back to 30 June for projects given planning permission where the sale or conveyance is executed before the end of 2019.
Stamp duty will be assessed on the value of the land purchase contract only and not the construction contract for a further twelve months. This means developers and buyers get another pass with all current residential developments, thereby dodging the full tax obligations.
Category: Government Finance, Politics
I truly wish that development was NOT the 3rd arm of our economy, but greed is (sadly) the caymanian way.
Given the rate at which every piece of mangrove is being torn down in order to build US$1m+ condo’s, the government must be missing out on an absolute fortune in stamp duty.
I wonder what is the reasons for the developers duties import extentions . Does government see the money that government is loosing . Or is someone else getting paid .
This may not be a bad thing as we will most likely see real estate sales surge before the end of the year which is good for our economy.
Very short term gain in time for the election, with construction industry doomed to suffer greatly in the next year. In fact a terrible idea.
Stamp duty doesn’t make any sense to begin with and is far too high. That to me is the bigger issue. People who bought here 30 years ago, paid no stamp duty and have contributed nothing to infrastructure since their original purchase…how does that make any sense?
I would rather Stamp Duty dropped to 2% and we implemented a REASONABLE annual Property Tax. People have been reaping the benefits of all these infrastructure upgrades and paying nothing for them.
If you use it you should pay for it.
Commie
Never been a better time to buy.
The real estate and building industries control us all. Get used to it!
Laughable!
Anything to appease the rich developers and clients!!
And the kickbacks will also continue?
The reason is for the seasoned pocket-fillers generosity. Gambling funds need replenishment or for whatever strong reasons pockets empty quickly. No care for humans, the love of money comes before all else.
Typical!
Wait one year for a clear loophole to close but pass the economic substance law within a few weeks based on limited information about the consequences. What a joke!
Hypocrites!
Why do they bother to pass these laws if they won’t I force them. This little island really need a good overhaul. Wonder who went flying to the powers that be and told him to wait awhile?
Alden hosted a number of developers who asked for it to be extended.
Yup, I guess all the big cats will rush to build!
Where else do you think the PPM gets $500k per election cycle to run a group of nobody lawyers as “Cayman’s best and brightest”
In constituencies with 1000 people these candidates are give 30,000 to 40,000 thousand dollars for simply signing onto the PPM agenda and four years of bowing their heads