Hard as it may be to believe, Goods and Services Tax (GST) has
now been a feature of life for businesses and consumers in Jersey
for over four years. Over this period, of course, the rate has
increased from the initial 3% to the current 5%. Few would be
prepared to bet on the rate staying at 5% indefinitely.
16 August 2012 is a red letter day as far as the impact of GST
on commercial leases is concerned. Under the so-called
'grandfathering' provisions in the GST legislation, the
'supply' made by landlords under commercial leases which
were entered into before 17 August 2007 (when the GST Law came into
force) was stated to be zero-rated until the earlier of:
the date when the lease was varied; and
16 August 2012
In other words, the grandfathering provisions were to last for a
maximum of five years.
Landlords under affected leases, assuming they qualify for
registration by virtue of having an annual turnover exceeding
Ł300,000, will therefore with effect from 16 August 2012 be
required to charge 5% GST to their tenants and account to the Taxes
Office for this GST less any 'input' GST paid by the
The issue for landlords will be whether the amount of rental
payable by their tenants is properly to be regarded as inclusive or
exclusive of GST. Leases entered into since the advent of the GST
legislation will typically contain express GST provisions. However,
many leases which have up until now benefited from the
grandfathering provisions, especially those entered into before GST
was even conceived of, will not contain any such provisions.
It will therefore be a question of construing each such lease to
see whether or not, on a proper construction, the rental can be
said to be exclusive of GST. This may well be the case in leases
which have widely-drawn 'outgoings' provisions. But it is
impossible to generalise and the wording of each relevant lease
will need to be specifically considered.
Clearly there will be some cases where landlords will need to
seek to agree lease variations with their tenants in order to
establish a proper basis for the recovery of GST. Even in cases
where the existing wording, in the absence of express GST
provisions, is considered satisfactory, landlords may well wish, if
the opportunity presents itself, to vary their leases to include
express GST provisions.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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The process for obtaining planning permission for development of property in the Cayman Islands has been updated as a result of the latest revision of the Development and Planning Law and accompanying regulations (July 2015).
In principle, when the parties agree to arbitrate, they shall be
bound by that agreement. It should therefore follow that when a
party initiates arbitration proceedings, the other party - the
respondent – will avail itself of the opportunity to present
its case and participate in the proceedings.
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