Real Property Gains Tax is making a comeback in 2010

Posted by on Oct 30, 2010 in Real Estate News

The re-imposition of real property gains tax in the midst of the present economic recession, does not seem to be in line with the government policy of encouraging investments. It may in fact discourage some would-be local and foreign investors from investing in landed properties in our country. The purpose of imposing gains tax under the RPGT Act 1976 on any disposal of real property is to curb speculative activities in the property sector. But any disposal after withholding the property for a certain number of years (say 5 years or so) is certainly no “speculation”. It can hardly be described as “speculation”. It is in reality an investment. In the circumstances, such disposal ought to be exempt from payment of gains tax. It is far from being reasonable to impose gains tax on investments. The Straits Times in Singapore on 27-10-2009 reported that a 2010 Post Budget Dialogue was jointly organized by several bodies (including the Malaysian Economic Association and University of Malaya’s Faculty of Economics and Administration) and supported by Standard Chartered Malaysia Berhad. After the Dialogue, Siti Halimah Ismail, Under Secretary of the Finance Ministry (Tax Analysis Division) revealed to the reporters that the government is expected to collect some RM500 million from the real property gains tax in 2010, while RM240 million will be lost in individual income tax, due to the reduction of 1% of income tax, from 27% to 26%. It may be difficult not to come to the conclusion that, as far as the re-imposition of the real property gains tax is concerned, it is more a revenue-collecting exercise rather than an attempt to curb speculation. As to the rates of gains tax payable, if there is confusion in the drafting of the relevant legislation, it is for the Ministry of Finance to see to it that the Exemption Order 2009 and the Finance Act (No.2) 2009 are amended accordingly, so that they are in line with the policy statement made by the Prime Ministers on the Budget Day. P.S. There was a turn of event recently. The Star on 24 December 2009 carried a piece of news with the heading: “RPGT to apply only for sales within five years of purchase”. The move is a boon to all property owners, becauseno gains tax is now payable after 5 years of the purchase of any real property. It is a departure from the 2010 Budget speech. The Star reported: “The real property gains tax (RPGT) announced during the 2010 Budget will now only apply to property sold less than 5 years from its purchase. Datuk Seri Najib Tun Razak said.” “The Prime Minister said the 5% tax would now only be imposed on property sold within 5 years of date of purchase … the decision would cause the government to lose about 200 mil in revenue. adding the move was made following...

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A New Selangor State Government

Posted by on Oct 30, 2010 in Real Estate News

I remember the flurry of news that trickled over the internet out of Malaysia and into my dormitory here in the United States almost two months ago — the news of political outcasts and newbies felling giants like Samy Vellu and Shahrizat Abdul Jalil. All this, as unimaginable as it was, though, paled in comparison to the news that Selangor — the state my family has lived in for three generations — was finally under a new government. Like most of my fellow Selangorians, I was and am fed up with the corrupt shenanigans of my state government, which acted as if it was above, rather than accountable to its own people. Despite its rough start, and my natural cynicism, I feel justified in being optimistic about the prospects for the Pakatan Rakyat state government in Selangor. To begin with, this was not supposed to happen. The last time Barisan Nasional lost its majority in the state assembly was 1969, and shortly thereafter, they carved the Federal Territory of Kuala Lumpur out of the state to ensure the opposition could never again shake the BN government. It was not without reason that former Menteri Besar Khir Toyo so audaciously embarked on his Sifar Pembangkang (Zero Opposition) campaign in the state — the opposition simply did not have bright prospects here, even in the urban areas not under the Federal Territory. I recall well that one political insider — from the opposition no less — was strongly skeptical that Elizabeth Wong could ever win in my state constituency, Bukit Lanjan. Insiders from the establishment laughed at the notion that Tony Pua could ever defeat Chew Mei Fun for the Parliamentary seat of Petaling Jaya Utara. Yet, to the surprise of everyone, the people of Selangor sent the previous administration packing, electing all these outsiders, from Nik Nazmi Nik Ahmad to Loh Gwo Burne, to be their representatives in the State Assembly and federal Parliament. Most striking was the figure of Khalid Ibrahim — the former high-flying corporate figure who quit the world of commerce to enter politics was supposedly a goner after his disastrous outing in Ijok last year. Yet, he came back to win Ijok, and succeed Khir Toyo as the new Menteri Besar. Khir Toyo made some weak noises about the possibility of Khalid not having the support of his DAP and PAS colleagues in the state assembly, but this was simply a non-issue; Sultan Sharafuddin invited Khalid to form the next state administration. The unlikeliest of unlikely scenarios had actually happened. Unsurprisingly, before the campaign even began to wind down, the problems of governance started to manifest themselves. Most notably, there was a bitter struggle for plum posts in the new state government. Who would get to be Deputy Menteri Besar? How many seats on the executive council would the DAP get? The new state government struggled...

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