Understanding the New Amendments to the Equal Distribution of Burdens Law

On November 18, 2022, an important amendment to the law concerning the Central Agency for Equal Distribution of Burdens was published. This amendment clarifies how the 0.4% contribution, related to property transactions, will be collected.

Background

The initial law, passed on February 22, 2021, introduced a 0.4% contribution but lacked details on the tax collection process, rendering it unenforceable. This amendment addresses those gaps.

Key Changes in the Amended Law

Who Pays the Contribution?

The 0.4% contribution is the responsibility of the property seller.

What Transactions Are Affected?

Property Sales: The contribution applies to sales of immovable property within areas controlled by the Republic, based on the sale price.

Share Sales: It also applies to sales of shares in private companies that own such property. Here, the contribution is based on the property's value as assessed by the Land Registry.

Clarifications Provided

Role of the Tax Commissioner:

The Tax Commissioner is now designated as the authority responsible for collecting the 0.4% contribution. They will issue the required payment certificates during property or share transfers.

Exemptions from the Contribution:

Loan Restructuring and Company Reorganization: No 0.4% contribution is required.

Prior Transactions: Transactions with property sale contracts or share transfer forms submitted before February 22, 2021, are exempt.

Tax Commissioner's Powers:

The Tax Commissioner has the authority to impose fines and other penalties according to existing tax laws to ensure compliance.

Recent Announcements

On November 21, 2022, the Tax Department announced that for transactions conducted between February 22, 2021, and November 18, 2022, there will be a grace period to settle the contribution without interest and penalties. Taxpayers should wait for a further announcement before making payments.

Updated Tax Forms

To facilitate the new process, the Tax Department has updated the relevant tax forms to include the 0.4% contribution calculation.