Shura Council may turn down MPs’ push to scrap 2% fee for first-time property transfers and gift tax

TDT | Manama

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A proposal to waive the 2 per cent fee for first-time property transfers, along with charges on gifts valued above BD50,000, is expected to be rejected by the Shura Council on Sunday.

The measure has drawn strong objections, with warnings that it would cut into public revenue and leave room for misuse.

A similar draft was turned down during the fifth legislative term.

Lawmakers backing the draft say it would ease the financial burden on families trying to buy or pass on a home, especially those already under pressure from upfront costs.

Financial strain

The idea is to remove fees for first-time residential property transfers, and for certain gifts of property, to help more Bahrainis secure housing without added financial strain.

The draft, introduced by the elected chamber, seeks to amend Article 59 of the Property Registration Law to allow a one-time exemption from registration charges for Bahrainis.

However, the Council’s Public Utilities and Environment Committee and the government argue that the goal is already being met and that the change would raise problems.

Housing loans

Current law exempts those who take housing loans from Eskan Bank from these charges, up to the value of the loan. That system is based on the individual, not the transaction.

According to the committee and the government, shifting the basis of exemption could lead to people using others who have never owned property to sign sham contracts and claim the exemption.

The government has also noted that any measure likely to reduce public revenue must first be agreed with the Cabinet, in line with the Constitution.

The Survey and Land Registration Bureau backed these concerns, warning that the proposed change would reduce income from a key stream of nonoil revenue.

Enforcement and fairness

It said the purpose of the amendment is already addressed by existing laws. Legal advisers raised further concerns about enforcement and fairness.

Members of the committee also pointed out that the current system has not given rise to major issues.

The 2 per cent registration fee is already subject to a 15 per cent discount if the transaction is filed within 60 days. This gives buyers an incentive to act swiftly without stripping income from the state.