COS 2021: Temporary Development Levy

Mr Gerald Giam Yean Song (Aljunied): The temporary development levy or TDL, is a tax payable when permission is granted for a temporary enhancement of the land value. The TDL can amount to tens of thousands of dollars payable by a small business every year and can form a significant portion of their business costs.

Tenancy agreements seldom specifying who is responsible for paying the TDL and tenants are often in a weaker bargaining position vis-a-vis their landlords when the TDL is levied. Often, the tenant is unaware of the TDL until they received the bill and would not have factored this into their business expenses. It can also be inequitable if the tenant bears the full TDL because the landlord also benefits from the enhancement of land value by being able to charge a higher rent to the tenant.

Could URA require that all change of use applications include an undertaking from the applicant that the TDL has been discussed between the landlord and tenant.

Second, for some industries, URA grants temporary permission or TP for only one year at a time. This can result in widely fluctuating TDL payable every year, making business planning difficult. Can URA provide businesses more certainty by providing them a choice of TP between three and five years to better align with typical commercial tenancy agreements? This will allow tenants to negotiate equitable rental contracts with their landlords and make other business plans.

Lastly, some businesses have lamented to me that their TDL far exceeds business revenue, especially during the pandemic. If businesses are unable to pay the TDL, they might have to close down, leading to losses to themselves, their landlords and their employees. The Government will also lose out on tax revenue. Can URA consider giving such businesses rebates or deferments of their TDL?

Ministry of National Development
4 March 2021

%d bloggers like this: