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Wednesday, November 4, 2009

5% property gains tax seen as a temporary move

KUALA LUMPUR: The Government’s proposal to impose a real property gains tax (RPGT) of 5% from Jan 1 may just be a temporary measure, says Taxand Malaysia Sdn Bhd managing director Dr Veerinderjeet Singh.

From left: Irene Dorner, Dr Veerinderjeet Singh and Taxand executive director Kang Beng Hoe at the seminar

“We feel that it is a temporary imposition. We think that in the long term, the original scale rates of 30%, 20%, 15%, etc will be coming back,” he told a press conference prior to a seminar on Budget 2010 jointly organised by Taxand and the Malaysian International Chamber of Commerce and Industry (MICCI) yesterday.

Prior to the exemption of the RPGT in April 2007, tax on gains from property sales was on a progressive basis from 30% to 0% depending on the holding period of the property.

Veerinderjeet however, said that total exemption from RPGT would be unlikely.

“What would probably not change is the 5%,” he said.

He called the RPGT tax imposition a “revenue generating measure that has not gone down too well with individuals.”

“We do agree that 5% does not appear to be sensible. Whether there will be a lot of revenue to be collected, we’re not sure – it depends on the transactions. But people would probably be happier if this took effect from 2011 rather than next year.”

He added however that property owners should be thankful that the RPGT was capped at 5% and not higher.

“With the capital appreciation (of our local property sector), the 5% tax is a small price to pay,” Veerinderjeet said.

MICCI president and HSBC Bank Malaysia Bhd deputy chairman and chief executive officer Irene Dorner applauded the Government’s push to promote the usage of green technology.

“What we need to do is to ensure that in 20 to 30 years, the businesses that we are doing are sustainable. We need to be very efficient in the use of energy and disposal of waste.

“And I think that’s exactly the sort of things that the Government should be doing in order to push businesses in the right direction,” she said.

Veerinderjeet also said the goods and services tax (GST) was the answer to Malaysia’s “tax revenue predicament” in view of her budget deficit and need to ensure a stable source of revenue.

The Government will decide whether to implement GST by year-end once it completes a detailed study of its social impact on the community.

“GST is a more stable source of revenue largely because it is a tax on consumption, and consumption patterns normally are more stable than profit patterns,” he said.

The one-day seminar, themed Challenges, Challenges & Latest Developments, was attended by experts from member firms of the Taxand global network from Malaysia, India, Australia and Indonesia.

By The Star


Central Oregon Homes said...

This is well,a good news for the property owners that the tax remains 5% and not higher. This decision should be think a million times before implementing it in the year 2011. Citizens should benefit as well as the business owners.

Kimberg said...

Hi, thanks for your comment!!