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Tuesday, April 22, 2014

MCA: Rethink GST on housing market

G Vinod | April 22, 2014

MCA wants the government to formulate a better policy on implementing the GST on the property market.

PETALING JAYA: MCA vice president Chua Tee Yong today urged the government to reconsider its decision to impose the Goods and Services Tax (GST) on housing projects as it would burden both buyers and developers.

Chua said that the government should also consider zero rating the affordable housing scheme, as the units are purchased by the low and middle income group.

“There is a misconception that residential property will not be affected by GST. Unless developers are willing to absorb the cost increase of about three percent, GST may cause a spike in the price of residential property,” he said.

Last year, Prime Minister Najib Tun Razak announced that government will introduce the GST, replacing the Sales and Services Tax.

Recently, the Parliament passed the GST Bill, clearing the way for its implementation come April 2015.

Many have poured scorn on the new tax system, claiming it will further burden the masses who are already struggling with low wages and soaring cost of living.

Chua, who is also a former deputy minister, said that GST exemption for affordable housing scheme would not be sufficient as developers would still have to purchase building materials with GST, in which the cost would be passed down to consumers.

He added that there were concerns that GST will be imposed on car parks when one purchases a condominium unit.

“Normally when we purchase a condominium unit, it comes with either one or two car parks. The problem is, it is not attached to the building.

“So developers are concerned whether GST will be imposed on the car parks or not. They argue that it should not be the case.” said Chua.

He urged the government to come up with a proper guideline to ensure there are no confusion when the new taxation system is implemented next year.

On how GST would affect the property market if not regulated, Chua said that it would further escalate house prices which is already too high at the moment.

“Unless the developers are willing to absorb the cost, I can foresee further rise in the housing market.

“But it is unlikely that the developers will do so as they are already absorbing much of the infrastructure cost such as setting up telecommunication and electrical outlets,” he said.


  1. "Unless developers are willing to absorb the cost increase of about three percent, GST may cause a spike in the price of residential property,"

    Not sure how he calculated it, but based on - calculation shows that the cost for contruction contractors has been reduced.

    1. Tun Faisal, i'll study the link.. thanks vm

  2. Replies
    1. Tun Faisal, i dont have your phone number.