Easing Leasing


The Treasury has assured the leasing industry to review a proposal in the budget to tax lease assets at market value at the end of the leasing period.
Under heavy lobbying from the leasing industry, Finance Ministry officials have decided to review the provision that would have forced leasing companies to pay tax.
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rn

rnLeasing industry doesnt pay tax as a result of the large capital allowances available to them. rn

rnThe industry says any move to tax transfers at their deemed market value will result in a huge tax liability since the companies are asset rich, making them unattractive compared to bank loans.rn

rnIf the proposal were withdrawn leasing companies would continue not to pay income tax. rn

rnLease transfers are normally done at a nominal value agreed to in the lease agreement.

The budget proposed that transfers be valued at market rates and tax paid on that.rn

rnLeasing companies will not be able to set off these amounts against their capital allowances, like in the case of trading

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