The Malaysian Institute of Estate Agents (MIEA) wants the Royal Malaysian Customs Department to clarify Goods and Services Tax (GST) requirements and issues within the secondary property market and how it will affect the investment community.

“Members have been complaining to us that nobody seems to know very much about GST. It is a situation where it is neither here nor there. There’s been some focus on developers and how it affects properties. There’s a lot of news reports where Real Estate & Housing Developers’ Association Malaysia (Rehda) and other developers have said that property prices are expected to go up 3% to 4% in the grand scheme of things 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,” MIEA president Siva Shanker told reporters at a press briefing yesterday.

“We’re talking about how it is going to affect secondary properties, how is it going to affect the individual owner who only has one shoplot, one office lot or one factory to sell. If you are not a property player and you don’t own multiple properties, you’re probably not equipped to answer any of these questions. How do you pay, how much do you pay, when do you pay, who do you pay to, at which point do you pay? There are so many questions and nobody has answers,” he added.

KP Bose Sdn Bhd tax consultant KP Bose Dasan, who was at the briefing organised by MIEA, said the guidelines from customs has not taken into account the investment community and does not provide a clear guideline for them.

“If I own a shoplot worth RM2 million, should I register? I’m renting it out now for RM100,000 per year, am I subject to GST? No, because the rent does not reach threshold of RM500,000 per year. If want to sell it? Do I collect GST from the buyer if the selling price is more than RM500,000?” he questioned.

Bose said all countries that have implemented GST have made it very clear, with four elements that have to be met before one is subjected to GST namely, the goods or service has to be a 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 collect GST.

“We should have a clear idea from customs, whether as an investor owning a commercial property that’s worth more than RM500,000, do I have to register and at which point do I register? When I sell my property? When my property rental exceeds RM500,000? Or now that I have held it as an investment, it is not a business asset so when I sell it, it is a capital disposal and not subject to GST. All countries have worked on this idea. We need a clear guideline,” he added.

Bose said a lot of sales have been aborted because buyers are holding back while investors are unsure on whether to collect GST or not. He said Customs should clarify this to avoid damaging the property market.

“The government wants the revenue, so they should make it easy to follow. GST should be straight forward. What we want is a guideline for the secondary market. For developers and contractors there are no problems, it is all clear,” he added.

Siva said to date, Customs have had sessions with property developers but have not engaged MIEA. He said the issues have to be clarified before April 1 as it is affecting the market.

Source: TheSunDaily.my