Question Tag: Non-Residential Premises

i) Taxation Principle for Rental Income and Relevant Rates

• Rental income received by a resident person from another resident person is subject to withholding tax.
• The applicable withholding tax rate for residential premises is 8%, while for non-residential (commercial) premises, the rate is 15%.
• This withholding tax on rental income is treated as a final tax for the recipient, meaning no further tax is charged on the rental income received.
  (5 marks)

ii) Treatment of the Transaction for a Business of Sale or Renting of Premises

• When a resident person conducts a business involving the sale or renting of residential or non-residential premises, the payment is treated as a supply of services rather than an investment return.
• In this case, the withholding tax rate is 7.5% on the payment made to the business, and this withholding tax is not final.
• The withheld tax serves as an advance tax, and the recipient (the business) will still be required to account for corporate tax based on their total income.