DOOMED: Property market to suffer from tax amendments

It is expected that the amendment of the Transfer Duty Act will have rippling effects on property investors.

Kwabena Antwi, a portfolio manager at local asset management firm, Kgori Capital said in the company’s quarterly review that the bill which was published last November, will increase property acquisition costs and further reduce property yields going forward.

“The major one being that share transfers in companies where the beneficial ownership of property changes will now attract transfer duty,” he explained, adding that previously these transactions did not attract any duty and were a way of transferring properties in the market.

Another notable change in the amendment of the Transfer Duty Act is the increase in duty payable by non-citizen companies from 5 percent to 30 percent.

Already there has been rejection from tax experts with Business Botswana also joining in to condemn this amendment, arguing that it has the potential to scare away investors.

It is feared the amendments could kill existing businesses and Foreign Direct Investment and also likely to result in property market crash as prices go up but demand remains flat.

Additionally, it is believed banks will lose out on loans provided as loaned amounts will exceed property values.

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