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GST and the property sector Full view

In Malaysia, the Goods and Services Tax (GST) kicked into implementation on 1 April 2015. Judging by the way GST has worked in other countries, the general sentiment has been a surge in consumer spending before its implementation. Consumer spending is therefore expected to slow down in the months that follow as consumers and business orient themselves to GST and its implications.

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Here are a couple of insights into GST and its forecasted implications on the property sector:

  • GST is a consumption-based taxation system which works as a replacement for the existing Sales and Service Tax (SST)
  • The introduction of GST in Malaysia is not a new idea; the first announcement of a possible implementation was made by the government a decade ago in September 2004 but the tax saw two postponements before its implementation was finally confirmed for 2015
  • GST will be charged on all types of supply of goods and services in Malaysia (except for goods prescribed as zero-rated and exempt-rated)
  • The Real Estate and Housing Developers’ Association (REHDA) has forecasted that residential property prices may rise by 3-3.5% after GST
  • The Royal Malaysian Customs (RMC) has also forecasted that housing prices may increase by 0.5% to 2%
  • A purchaser of residential property will not be subject to GST since the supply of residential property falls under the category of exempt-rated supply
  • Eventhough residential property developers are not allowed to claim any input GST incurred on their business purchases, the cost of their own purchases will increase. Due to this, the developer may adjust its selling price to reflect the extra costs due to the unrecovered input GST.
  • As for commercial and industrial properties, the cost is expected to increase as those sectors will be subjected to GST

 

References:

  1. http://www.iproperty.com.my/news/9853/the-gst-a-quick-look
  2. http://www.iproperty.com.my/news/9846/gst-under-the-microscope
Back
×

GST and the property sector Full view

In Malaysia, the Goods and Services Tax (GST) kicked into implementation on 1 April 2015. Judging by the way GST has worked in other countries, the general sentiment has been a surge in consumer spending before its implementation. Consumer spending is therefore expected to slow down in the months that follow as consumers and business orient themselves to GST and its implications.

undefined 

Here are a couple of insights into GST and its forecasted implications on the property sector:

  • GST is a consumption-based taxation system which works as a replacement for the existing Sales and Service Tax (SST)
  • The introduction of GST in Malaysia is not a new idea; the first announcement of a possible implementation was made by the government a decade ago in September 2004 but the tax saw two postponements before its implementation was finally confirmed for 2015
  • GST will be charged on all types of supply of goods and services in Malaysia (except for goods prescribed as zero-rated and exempt-rated)
  • The Real Estate and Housing Developers’ Association (REHDA) has forecasted that residential property prices may rise by 3-3.5% after GST
  • The Royal Malaysian Customs (RMC) has also forecasted that housing prices may increase by 0.5% to 2%
  • A purchaser of residential property will not be subject to GST since the supply of residential property falls under the category of exempt-rated supply
  • Eventhough residential property developers are not allowed to claim any input GST incurred on their business purchases, the cost of their own purchases will increase. Due to this, the developer may adjust its selling price to reflect the extra costs due to the unrecovered input GST.
  • As for commercial and industrial properties, the cost is expected to increase as those sectors will be subjected to GST

 

References:

  1. http://www.iproperty.com.my/news/9853/the-gst-a-quick-look
  2. http://www.iproperty.com.my/news/9846/gst-under-the-microscope
Back