Business

Tuesday August 21, 2012

Property groups want real property gain tax to remain status quo

By LIZ LEE and JOHN LOH
starbiz@thestar.com.my


PETALING JAYA: The real property gain tax (RPGT) revision which had been one of the highlights of Budget 2012, should be either reverted or adjusted based on proper understanding of the market situation, according to property sector associations.

Real Estate and Housing Developers Association Malaysia (Rehda) revealed in its Budget 2013 wish list that the Government should not review taxation or policies which were beneficial for the industry and recommended the previous RPGT regime be reinstated.

“Under the current market conditions such as the softening market and early signs of better growth of the economy ahead and the uncertainties of the United States and eurozone economy, we urge the Government not to interfere with the existing policies which are business friendly,” Rehda told StarBiz.

With the local Gross Domestic Product announced recently at 5.4%, Rehda believed that Government should grab the opportunity to facilitate market growth by introducing punitive and restrictive measures and suggested the new budget included reverting to the previous RPGT regime of 5% tax if a property is disposed before five years and no RPGT if disposed after five years.

The revised RPGT in Budget 2012 meant that gains from property held for less than two years were subjected to a 10% tax while a 2% was imposed for properties held between two and five years, and those who kept it for more than five years are exempted from tax.

National House Buyers Association secretary-general Chang Kim Loong sided Rehda's recommendation, noting that the current RPGT was not effective in reducing market speculation.

“Developers typically need two years to complete landed properties and three years to complete stratified properties. This would mean that speculators could buy properties from developers, flip on completion and in effect pay the same 5% RPGT rate that was before Budget 2012,” he explained.

The Master Builders Association Malaysia (MBAM) opined that more focus should be put on affordable housing which will benefit more stakeholders and purchasers.

In addition, MBAM wished for the Government to release more land for affordable housing especially in the Klang Valley to meet the demand from first time time housebuyers as well as to sustain the housing and construction sectors.

On MBAM's Budget wish list was also lower coporate tax rate to be on par with Singapore and Hong Kong.

On construction, MBAM pointed out a shortage of skilled workers for heavy engineering like the My Rapid Transit (MRT) project.

“We wish to appeal for skilled workers from China to be allowed to work on these projects as many Chinese workers are now available after completing MRT and high speed rail projects in China,” it said, noting that MBAM would like to source foreign workers from Asean and India too.

With the announcement of the Budget 2013 inching closer, the property sector associations have again reiterated the need for more measures to be taken to supply the market with affordable property.

For the coming Budget, Rehda recommended a closer look into the capital contribution charges on developers that is eventually passed on to housebuyers.

It said that currently developers are required to pay various capital contributions such as sewerage, electricity, water, telecommunications, Construction Industry Development Board levy and surrender of land, construction of facilities and infrastructure as well as compliance of other planning requirements.

Through Rehda's own research, it found that all these compliance costs payable to various authorities could be as high as 30% of the selling price of the housing units.

What Rehda recommended is for private utility companies to not impose capital contribution charges on developers as developers are already required to lay infrastructures in their development projects and bring in new customers to the utility companies.

“These utility companies should revise their own capital and collect revenue via tariff based on consumption,” the association said.

  • E-mail this story
  • Print this story
  • Bookmark and Share