Attempts through the budget to force leasing companies to pay tax could make leasing unattractive and uncompetitive according to the industry.
Government in its budget 2004 announced that leased assets would be taxed at their market value when being transferred to the lessee or the party obtaining the lease.rn
rnLeasing industry says taxing transfers will result in a huge tax liability since leasing companies are asset rich, making them unattractive compared to bank loans.rn
rnThe Leasing Association is planning to appeal to the finance ministry for a review of the proposal, which came as an annexure to the budget.rn
rnLeasing companies dont pay taxes due to the large capital allowances as a result of carrying a lot of assets in their balance sheets.rn
rnIndustry says they will now be liable to Corporation Tax when lease assets are transferred to the lessee at what the budget refers to as lquote deemed market value.rn
rnThese transfers are normally done at a nominal value agreed to in the lea