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Friday, June 12, 2009

Malaysia to relook stamp duty rate

WORKS Minister Datuk Shaziman Mansor said the government needs to relook the stamp duty of 0.5 per cent on service contracts, as it is having a negative impact on the construction sector.

The new stamp duty rate, proposed under Budget 2009, makes a RM10 million construction contract attract an ad valorem duty of RM50,000.

The combined effect of stamping all agreements including sub-contracting and outsourcing at 0.5 per cent of the contract value is exponential and will be passed on to consumers, regardless of whether they are government or private contracts.

Master Builders Association Malaysia president Ng Kee Leen last week urged the government to revert to the previous practice of a RM10 flat fee on construction services agreements that do not require collateral.

"I support the contractors' call to relook into this stamp duty rate change," Shaziman told reporters after officiating at the Construction Industry Integrity Seminar organised by Construction Industry Development Board (CIDB) in Kuala Lumpur yesterday.

Asked if he specifically supported a complete waiver of stamp duty on construction contracts or to revert to the RM10 flat fee, he replied: "I support a revision. The decision lies with the Cabinet."

On the recent collapse of Jaya Supermarket in Petaling Jaya and the roof of Stadium Sultan Mizan Zainal Abidin in Terengganu, the minister said investigations are still ongoing and he hopes to receive the reports soon.

Shaziman said in the mean time, CIDB will continue to weed out contractors who are incompetent and not credible from its register.

"We don't want part-time contractors. We'll strike out the dormant ones," he said.

Currently, there are 63,000 contractors of varying grades registered with CIDB.

By Business Times (by Ooi Tee Ching)

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