KUALA LUMPUR (Sept 19): The sales and service tax (SST) is a major concern for property developers with over 70% planning to raise property prices by 3% to 5% because of it, according to a survey by the Real Estate and Housing Developers’ Association (Rehda) Malaysia.
The survey of 187 developers found that 62% expect the SST to greatly increase project costs and affect business operations. Around 70% believe it will raise construction costs by at least 3%, leading 73% to consider raising prices.
To address this, Rehda is working with the government to improve SST rules. President Datuk Ho Hon Sang said clearer guidelines are needed for the construction and property sectors, including ways to avoid double taxation and offer tax breaks for key materials and eco-friendly products.
Developers are also calling for input tax credits or faster refunds to ease cash flow, simplified SST rates including tiered options, and enhanced digital systems for better engagement with Customs and relevant authorities.
Explaining the challenges developers face with the tax, Ho said, “While residential properties are exempt from the SST, commercial properties are subject to it, and for mixed developments, it becomes very difficult to decipher. Materials are generally exempt, but human labour and machinery rentals — which make up a significant portion of our cost inputs — are taxed. It’s very cumbersome for developers to itemise each component. That’s why we are proposing a simplified approach, such as imposing a flat 3% SST, since cost components are typically half in labour and another half in building materials.”
In addition to tax reforms, Rehda is advocating for the revival of the Home Ownership Campaign (HOC), which previously offered stamp duty exemptions for the instrument of transfer. “In the previous HOC 1 and HOC 2, the take-up rates were good. So we believe that reintroducing the HOC is something that can spur the market and create a feel-good factor. I think that is something very important for developers and buyers to feel good again to buy,” Ho added.
