Property prices in Malaysia are expected to rise by 2.6 percent following the implementation of the forthcoming Goods and Services Tax (GST), according to media reports citing The Real Estate and Housing Developers’ Association Malaysia (REHDA).
Datuk Ng Seing Liong, Chairman of the association’s task force on accounting and taxation, noted the calculation is based on its consultations with member developers and industry experts.
REHDA’s estimate differs from that of the Customs Department, which sees an increase of between 0.5 percent and two percent on house prices post-GST.
Ng revealed that the association, which is in full support of GST, agrees with Customs GST Director Datuk Subromaniam Tholasy that land did not incur the six percent GST rate.
However, land does not account for the biggest cost component in property development.
“As our calculation clearly spells out, the construction cost, which constitutes 46 percent of the total development, is not only the largest component but also the component which will attract the GST of six percent,” said Ng.
He noted that the GST on this component will eventually lead to an increase in home prices once GST is implemented in Malaysia on April 1, 2015.
Farah Wahida, Editor of PropertyGuru Malaysia, wrote this story. To contact her about this or other stories email farahwahida@propertyguru.com.my
