15% Tax Rate on Rental Income

An optional 15% flat rate of taxation is available for rental income arising from immovable property rented out for residential and commercial purposes.

Do you Rent Immovable Property?

If you do, then there is the option to tax such income arising from the rental of immovable property at a flat rate of 15%.

For the income arising in 2016, the flat rate applies on rental income arising from both immovable properties which is rented out for residential purposes as well immovable property which is rented out for commercial purposes. The 15% can be used by both individual taxpayers as well as companies.

How is the 15% calculated?

The 15% rate is calculated on the gross income, hence without deducting any expenses.

What do you need to do in order to apply for the 15%?

The 15% tax rate is optional and if you or your company wish to use this reduced rate, you need to fill in and file a prescribed form as provided by the Inland Revenue Department. In such form, you should include the details about the property being rented out, the gross income received in respect of each property and details about yourself or your company as the taxpayer.  Such form needs to be signed and submitted to the Commissioner for Revenue in original by not later than 30 June 2017.

Should you or your company opt to tax the rental income at 15%, will you or your company be bound to the 15% final tax regime forever?

No. The decision whether the 15% tax rate will be used or not can be taken annually, as is beneficial to you or your company.

How can we help you?

We can assist you and your company in assessing if the 15% tax rate is more beneficial as well as assist you and your company with preparation and submission of the compliance documentation required.

We can also assist you and your company to prepare the annual income tax return as well as to prepare the aforementioned prescribed form through which you and your company can utilise the 15% tax regime.

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