|
Increase in
stamp duty to hit property buyers
05/06/2009 The
Star By TEH ENG HOCK
KUALA LUMPUR: Those buying and renovating their properties will have to
fork out more following an increase in stamp duties.
Master Builders Association Malaysia (MBAM) president Ng Kee Leen said the
extra costs incurred would eventually be passed down to the end-consumers.
The amendment of the First Schedule of the Stamp Act 1949 came into effect
on Jan 1 this year, where it stated that all “bonds, covenant, loan,
services, equipment lease agreement of any kind whatsover” are chargeable
with duty at the rate of RM5 for every RM1,000, or part thereof - which is
effectively 0.5% of the contract value.
Prior to the amendment, the stamp duty chargeable on a normal service
agreement without security was fixed at RM10.
“With the amendment, a RM10mil construction contract will now attract an
ad valorem duty of RM50,000, while previously, it was only a nominal duty
of RM10 per document regardless of the contract amount,” he said.
He called on the Government to revert to the previous system, and said he
would raise this matter in a dialogue with the Finance Ministry on June
11.
“Regardless of whether the contracts are Government or private, the
ultimate cost is passed back to the Government and the people,” he told a
press conference.
Ng said that although the amendment came into effect in January,
contractors were paying the nominal RM10 for the first three months of the
year as the government agencies took some time to switch to the new
system.
“But since then, many had no choice but to pay according to the new
amount. This creates a cash flow problem for our members. If they don’t
pay, then they cannot go ahead with their projects,” he said.
MBAM honorary tax adviser Yee Wing Peng said in addition to the increased
stamping fee, members were already paying a Construction Industry
Development Board (CIDB) levy of 0.125% on a construction contract, and 5%
service tax on professional services such as project management,
architectural, surveyance and engineering consultancy.
“The construction industry is multi-tiered, meaning there will be multiple
levels of sub-contracting works.
The combined effect of stamping all agreements including sub-contracting
and outsourcing at 0.5% of the contract value is exponential,” he said.
|
