In the last article we considered a scenario where an exempt person is entitled to income which would otherwise be subject to withholding taxes had it been paid to a chargeable person, and wondered if such payment should be subjected to withholding tax (WHT).
We found that practically when a taxpayer is exempt from tax, they are not expected to submit tax returns. Therefore logically if they are entitled to income which is subjected to WHT and it is deducted, they will find it difficult to claim their tax credit unless if they make special arrangements with BURS to refund the WHT directly, without having to claim the credit through the return, which they are not required to submit.
We therefore concluded that the payer in this incidence should confirm their doubts on whether they should withhold or not with BURS and then act accordingly.
Finally we believe that this same interpretation should be extended to all withholding taxes including WHT on dividends and we stand to be corrected.
This week we attend to a question which goes like: “Thank you very much for the discussions over the Guardian newspaper. I need to know the section of the Act that says that a company that sells its shares for the company whose business is residential property is deemed to have sold the residential property and not the shares. And we would also like to know if this is applicable practically. Thanks for the assistance” BM
We are looking at the 10th schedule, paragraph 4 (e) as amended in July 2006. This paragraph talks about the deductions that are allowed under the disposal gains computations.
Then it has a proviso which says that “….a sale of shares of a company owning immovable property as the dominant underlying asset of the company shall be deemed to be the sale of the immovable property.” This section is very much applicable today. We do have persons who have acquired property and registered it in the name of their companies.
When they make disposals of such companies, the commissioner general (CG) has to consider whether it is the main asset in the company’s statement of financial position. If that is the case then the disposal of the company is treated as that of the property, even if the shareholder claims to be disposing of the shares in the company.