The Land Development Duty Act, Cap. 78 ("the Act ") was enacted on 30 August 1962 and establishes the statutory framework for imposing development duty on the capital gain arising from certain land transfers in designated special development areas. Its purpose is to enable the Government to recover part of the increase in land value attributable to public development and investment in these areas.
The Act charges development duty where a capital gain arises on the sale of the fee simple interest in land within a special development area during a prescribed valuation period. The duty is calculated as the sale consideration less defined allowable deductions, which include:
- the improved value of the land at a specified base date (or the purchase price if acquired after the base date);
- qualifying capital expenditure incurred after the base date, together with prescribed allowances; and
- certain transaction costs, such as stamp duty, property transfer tax, and professional fees.
The Minister may, by order approved by both Houses of Parliament, determine the rate of development duty, which may not exceed 50 per cent. The Act provides the procedural framework for assessment, payment, and collection, vesting responsibility in the Commissioner and requiring the transferor (seller) to submit relevant instruments or particulars for assessment within defined periods.
Instruments of transfer are not deemed duly stamped under the Stamp Duty Act, Cap. 91 unless development duty has been assessed and paid, or other conditions prescribed by the Commissioner are met. No land transfer will be registered without a certificate from the Commissioner confirming either that no duty is payable or that duty has been paid.
The Act also covers enforcement: development duty is a debt due to the State, recoverable by the Commissioner. Non-compliance attracts penalties, including fines, increased duty, and, in some instances, imprisonment. Refunds are provided where duty has been paid, but the transaction does not proceed.
To ensure fairness, the Act incorporates a dispute resolution process. Taxpayers aggrieved by the Commissioner’s decision may appeal to the Barbados Revenue Appeals Tribunal, and further appeal lies to a Judge in Chambers and, subsequently, to the Court of Appeal. Development duty remains payable in accordance with the Tribunal’s decision while further appeals are pending, unless otherwise ordered by the court.
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