KUALA LUMPUR — The Malaysian Institute of Estate Agents (MIEA) says real estate agents are still in the dark about how the Goods and Services Tax (GST) will impact transactions related to secondary property.
MIEA has asked the Royal Malaysian Customs Department to further clarify GST requirements and issues within the secondary property market and how the newly implemented tax regime will affect the investment community.
The institute’s president Siva Shanker said that a number of its members have complained that they do not seem to know very much about GST and how it will impact the sale of existing properties.
“It is a situation that is neither here nor there. There has been some focus on how it affects [primary] properties, there has been a lot of news focusing on developers who have said that prices are expected to go up by 3 per cent to 5 per cent once GST is imposed, but nobody has done any analysis or survey on how property prices are going to be affected in the secondary market,” he said.
Siva added that there was little being said about how GST is going to impact the individual owner, who has only one shoplot, one office or one factory to sell. Residential properties are currently tax exempted.
“How do you pay, how much do you pay, when do you pay, who do you pay to? There are so many questions and nobody has answers,” he said.
Additionally, tax consultants have also complained that the guidelines need to be clearer with regard to ownership of property and those who have bought property for investment purposes.
Principal of KP Bose Sdn Bhd, KP Bose Dasan, explained that a RM2 million shoplot rented out at RM100,000 per year is probably not subject to GST as the rent is below the stipulated threshold of RM500,000 per year.
“However, the property is worth more than this, so does the owner have to register?” he asked.
Furthermore, he said other countries that have implemented GST have made it very clear, with four criteria that have to be met before an individual is subjected to GST. The goods or services must be taxable supply, it must be made in the country, it must be in the course of business, and the business or owner must be registered for GST in order to include GST into their billings.
Bose said customs should give a clearer picture on who should be registering for GST. In most countries the sale of a property is considered to be capital disposal, and because of this, it is not subject to GST. He asked if this will be the case here.
He warned that a lot of planned sales will be aborted and planned investments held back as a result of the confusion. He said that if the Customs Department does not clarify the matter, it will be damaging to the property market.