Businesses that spend money on eligible costs for constructing or upgrading commercial structures and buildings within designated Freeport tax sites will receive a special tax benefit. This will involve an increased rate of Structures and Buildings Allowance (SBA) that applies to qualified expenses related to creating new structures or improving existing ones, specifically for commercial purposes within Freeports.
The improved SBA rate will be accessible for assets meeting the criteria and put to use on or prior to September 30, 2026. This applies from the time a Freeport tax site is designated. The enhanced SBA rate will follow a straight-line basis of 10% per annum.
This change will apply to qualified expenses when the initial construction contract for the pertinent structure or building is made on or after the date when the Freeport tax site is designated.
Section 2A (Part 2A Capital Allowances Act 2001) will be adjusted to enforce the enhanced 10% relief rate starting from the operational date for Freeport tax sites. This will reduce the duration needed to provide tax relief for eligible expenses from 33 and one third years to a decade.
To be eligible for this relief, the structure or building must be put to qualifying use on or before September 30, 2026.
The law will allow reasonable allocation of eligible expenses for structures and buildings that are partially situated within and partially outside the boundaries of Freeport tax sites.
