May 09 2011

Tax evasion by landlords costs Govt RO50m year

By Saleh Al Shaibany MUSCAT: Tax dodging landlords cost the government a revenue loss of nearly RO50 million every year. But that may change now as new measures are being formalised to make sure the culprits do not
get away.

According to an official of the Ministry of Finance , some 70 per cent of the landlords do not pay tax at all, or pay just a fraction of the tax amount on the properties they rent or sell.

"It costs our Revenue department a loss of up to RO50 million a year. It is a lot of money missing in the budget and the government will do what it can to make sure these greedy landlords pay their dues," the Finance Ministry official told Times of Oman.

According to another official, the government is putting in place plans to collaborate with Muscat Municipality , the Tax Department and the Public Prosecutor's Office to nab the tax culprits.
Both the Finance Ministry and Muscat Municipality specifically blame real estate agents for being lax on tax paying.

"We'll issue a strong warning to all (real) estate agents telling them to make sure that they fill the property rental contracts and submit (it) to the Muscat Municipality without failing. We know that some agents do not do that because the landlords ask them not to. Tax cheating is a punishable offence and we are working out a detailed plan to stop the abuse," the Finance Ministry official said.

All property rentals are subject to a 3 per cent tax and both the landlord and the tenant must fill a contract for the estate agent to submit the agreement to Muscat Municipality . If a real estate agent is not involved, then it's the landlord's responsibility to submit the rental contract to Muscat Municipality , officials pointed out.

Tax officials also blamed tenants for not insisting that the contracts they sign must be stamped by Muscat Municipality .
"Tenants, who do not demand that tax is paid on the lease they sign, are accomplices to the tax evasion crime. They can also face punishment," a tax official warned.

Some landlords selling their properties declare the transactions at a much lower price so that the buyer pays a smaller amount of tax, the tax department official added.

© Times of Oman 2011

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