Malaysia (Photo: REUTERS/Bazuki Muhammad)
Malaysia's real property gain tax has been a controversial issue for a few years. The issue was recently a highlight in the 2012 budget, according to Malaysian news reports.
Real Estate and Housing Developers Association Malaysia (Rehda) has revealed a wish list that the government should not review taxation and policies which were beneficial for the industry, and recommended that 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 Malaysia media StarBiz.
Malaysia's GDP has grown significantly in recent times, prompting Rehda to suggest the government take advantage of the strong economy in order to facilitate market growth by introducing punitive and restrictive measures. The association suggested reverting to the previous RPGT regime of five percent 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 percent tax while a two percent was imposed for properties held between two and five years, and those who kept it for more than five years are exempted from tax, according to Starbiz.
Others agree, amongst them the National Home Buyers Association secretary-general Chang Kim Loong, who sided Rehda's recommendation noting that the current RPGT regulations were not sufficient 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 percent RPGT rate that was before Budget 2012," he explained.
The Master Builders Association Malaysia (MBAM) also noted that more focus should be put on affordable housing which would benefit more stakeholders and purchasers. Among its suggestions were the wish for the government to release more land for affordable housing projects to meet a growing demand from first-time house buyers. On MBAM's wishlist was also lower corporate tax rate to be on par with Hong Kong and Singapore.
The issue of affordable housing has taken front stage lately, as the government prepares to announce the 2013 Budget. For the coming Budget, Rehda recommended a closer look into the capital contribution charges on developers that is eventually passed on to housebuyers. Especially the quesiton of compliance costs to various autorities and various capital contribution charges such as those for sewage, electricity, water and telecommunications is a contension point as it pushes costs for the developers up.
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.