(a) A UK lessor receives favourable tax allowances on the purchase of UK manufactured equipment. Aircraft, ships and containers bought for leasing to overseas lessees qualify for 100% first year writing down allowance. Other plant and equipment bought for leasing to overseas lessees qualifies for writing down allowances at 25% on the reducing balance
basis. These allowances offer some opportunity for lessors with UK tax liability to reduce the cost of the goods
concerned to overseas purchasers.
(b)
Rentals are structured on an annuity basis where payments
are of an equal size. This can give a short term cash flow
advantage to the lessee compared with higher early interest
payments associated with a straightforward sale on credit terms. However the advantage may in some cases be minimal, so
prospective leases should be considered on a case-by-case basis;
(c) For presentational reasons the Chinese might prefer to
lease goods rather than purchase them on oredit in order to
avoid appearing to be substantially in debt to the West.
DISADVANTAGES OF LEASING
Suuria ertuteavitado Szkatutaona A
B...
6 Leasing is not a straightforward proposition, however, and there.
is one fundamental draw-back which will limit its attractiveness to
the Chinese. Despite the advantages quoted in 5 above, the real cost of leasing is unlikely to prove cheaper over the life of a particular
project than the corresponding sales contract. The initial lower
payments associated with leasing are offset by much higher payments
in later years to give a discounted cash flow (or real) payment
that is normally at least equal to the credit payment. On top of
this of course must also come the margins of the leasing company
2
No comments yet.
Private notes are available after approval.