This is really bad news for those who wishes to buy residential property within the next few years.
Sarawak Housing And Real Estate Developers’ Association (Sheda) Secretary General Sim Kian Chiok predicted the imposition of Goods and Services Tax (GST) next year will lead to an increase by three to four per cent in prices of local properties.
Sim told the Borneo Post, developers will pass the extra cost incurred due to GST implementation to buyers especially in areas (Bintulu) where demand is more than supply.
Sheda have recommended government to exclude building materials which were not subjected to sales and service tax before will also be exempted under the new tax system.
The Sales Tax Act of 1972 excludes list of building materials such as bricks, cement and floor tiles, classified as First Schedule Goods, from sales tax. Building materials classified as Second Schedule Goods currently being charged 5 percent sales tax.
Sim said if First Schedule Goods are to be classified as zero-rated goods, GST exempted then impact of GST on residential properties can be kept to a minimum.
“By doing so, GST implementation will not add more cost to the construction of houses, thus keeping the tax effect to the minimal,” said Sim.
GST will replace the current Sales and Service Tax starting May 1, 2015.