GST is Already Hard Enough to Cope With! Hold Off in Increasing the Stamp Duty

September 26, 2017


The Real Estate and Housing Developers’ Association Malaysia (REHDA) warned that the affordability issue plaguing the property market will worsen if the government does not lower the goods and services tax (GST) imposed on construction materials and stamp duty for residential properties.

This comes as the stamp duty and six percent GST are among the reasons for the significant increases in property prices for the past few years, said Datuk Ng Seing Liong, past president of Rehda.

Introduced in April 2015, the six percent GST has led to higher construction cost, which is eventually passed on to property buyers. While homes are exempted, they are not zero-rated. As such, developers are prohibited from claiming back the input tax, hence passing the cost to home buyers.

“Rehda has been telling the government that you can introduce GST but for construction materials you can actually lower it. In many countries, there are many types of GST rates, it’s what they call differential rates. This is an area where the government, if they want to help the construction industry, they should lower the GST,” said Ng at a briefing on REHDA’s property survey.

He noted that a one to two percent GST for construction materials would be better, reported the Sun Daily.

Meanwhile, stamp duty – which is another component of affordability – should have been slashed following the introduction of GST.

“But now, they are looking at increasing stamp duty for property above RM1 million at four percent. Now stamp duty for the first RM100,000 is at one percent, RM100,000 to RM500,000 is at two percent, RM500,000 and above is at three percent. But they want to go another tier above RM1 million at percent,” added Ng.

While acknowledging that material costs are subject to various market forces, REHDA president Datuk Seri FD Iskandar said things such as levies, for instance on steel, should be lifted to lower construction cost.

He revealed that Thailand and Malaysia have similar steel prices at around RM1,700 per tonne. However, Malaysian contractors are paying more, at up to RM2,800 per tonne, due to the government’s levy.

“We understand that every manufacturer has a cost. We are not asking them to sell below cost and make losses … but the moment you put an element such as a levy, it unnecessarily increases the cost,” he said.


Image sourced from FMT.


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