News

The Sarawak Housing and Real Estate Developers’ Association (Sheda) has urged the government to make building materials zero-rated from the Goods and Services Tax (GST) as well as to reclassify residential properties.

Sheda secretary-general, Sim Kiang Chiok revealed that the association has appealed to the federal government via a joint memorandum with Sabah Real Estate and Housing Developers’ Association (Sarehda) and Real Estate and Housing Developers’ Association (Rehda) for building materials – such as bricks, cement and steel bars that do not attract sales tax – to be zero-rated from GST.

“Doing so will not add any cost to the materials, thus building costs will be less impacted by the GST,” said Sim during the GST Property Development Perspective Seminar held yesterday.

“Any increase in supply cost will naturally spillover into an increase in building costs…This is simply a case of logical progression and mathematics,” he added.

Aside from this, Sheda also called for residential properties to be reclassified as zero-rated supply instead of exempt-rated in order that suppliers and contractors may claim input credit tax and not be forced to significantly increase the cost of building homes.

Sim explained that developers will not be able to claim back the GST imposed on building materials if residential properties are exempt-rated.

“An inability to claim back such tax will also naturally lead to higher building and development costs,” he said.

What the public does not know is that developers have to bear a significant amount of capital to successfully complete a project, said Sim.

“They have to comply with the requirements of over 14 agencies and are liable for severe penalties as well as heavy risks.”

Sheda’s GST seminar yesterday was held to educate the public on the impact of GST on the property sector. Held in collaboration with IFCA MSC Bhd (IFCA), the seminar was facilitated by Daniel Chow, the chief financial officer (CFO) of IFCA.

*source from PropertyGuru Malaysia on Jun 19, 2014