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Appeal to revoke 12% withholding property tax

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di-ve.com report by Vanessa Macdonald A leading real estate agent is appealing to the Finance Minister to revoke the 12 per cent withholding tax on property sales, saying that the current scenario meant it no longer made sense. Dhalia business development director Chris Grech said the tax had been introduced in the Budget for 2006 at a time when property prices were rising fast.

Until then, Capital Gains Tax was paid on the sale of property based on set tax rates of 35 per cent on the profit made on the sale. The Finance Minister had hoped the withholding tax would circumvent the under-declaration on the value of the sale in order to reduce the amount of tax paid.

The Final Withholding Tax (FWT) was set at 12 per cent on the market value of the property sold, without allowing for expenses and other related exemptions which used to apply under the Capital Gains Tax system, and was applied upon contract of sale.

In February, 2006, Parliamentary Secretary Tonio Fenech (as he then was) unveile…