Tag Archives: GST

Will GST Exemption Lower the Property Prices?

The expectation is quite high that an increase in the Real Property Gains Tax (RPGT) and an abolition of the developer interest bearing scheme (DIBS) will dampen the property market. But, there has been little attention on our government’s move to exempt residential properties from the Goods and Services Tax (GST), which is going to replace the current Sales and Service Tax (SST) effective from April 2015.

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Do you think the prices will drop or remain unchanged? To me, it is very unlikely. Why? First, there is a need to understand GST and the supplies that come under it. As for exempt supplies, the category in which the residential properties have been placed are not subject to GST. So, businesses providing exempt supplies cannot charge GST on the final product to their consumers. However, those developers who are not eligible to claim input tax from the government on GST paid will then be saddled with additional costs due to the 6% of GST which is payable on almost all its inputs such as construction cost, services, building materials, etc cannot be claimed from the government. Being business entities, they will most probably pass on the non-claimable tax to the consumer end.

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GST to be Implemented in Budget 2014

Malaysia may introduce the goods and services tax (GST) when Budget 2014 is tabled on Oct 25. This is prompted by worries of a ratings downgrade should Malaysia’s fiscal deficit remain unresolved.

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According to Fitch Ratings, one of the Top three global ratings agencies, the public finances remained as the country’s main weakness, namely the high federal government debt that stood at 53.3% of GDP at end of 2012 compared to 51.6% at end 2011. At the same time, the country’s low fiscal revenue base stands at 24.7% of GDP compared with the median of other A rated countries at 32.8%.

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