Good and service tax (GST) has been zerorised since 1st June 2018. This meant that from 6 percent previously, it has been zero for the past 2 months. This will be in place for one more month since our new or rather reintroduction of sales and services tax (SST) will be in place from 1st September 2018. Due to this tax holiday (no tax whatsoever) as well as the ‘threat’ from the upcoming SST, we could see the car sales hit the roof. Earlier article here: People are simply buying! Not everyone needs new cars right? In fact, just a few days ago, it was reported that the cars under the zero GST have all been sold off. New stocks will come with SST. As for how much it will affect the car prices, no one has any firm idea yet. However, it is now said that the SST may benefit potential property buyers! Here’s that report in TheStar dated today, 30th July 2018: SST to benefit house buyers more, say Penang contractors
In the report, the President of Penang Electrical Merchants Association Khaw Tatt Siew says that SST may benefit house buyers more compared to the GST. This is because the 10% SST is a one-off charge which only applies to the manufacturer, supplier or contractor. However, GST used to be applied at all stages, from the raw materials to the manufacturer, supplier and contractor. He said, “An example is the price of a RM100,000 property, which would cost RM106,000 with the addition of GST for buyers, but the 10% SST does not apply to the RM100,000 price tag.” Thus Khaw said the SST is unlikely to affect the end user much. He added, “The developers will possibly absorb the increase to boost their sales in view of the slow property market.” Earlier, on July 16, Finance Minister Lim Guan Eng announced that the provision of services would be taxed at 6% while the sales of goods would incur a 10% tax under the SST. Here’s that full article in TheStar for reference.
By the way, if we read closely, what is also being implied here by Khaw is that for many property developers, in order not to scare away buyers with ever higher prices, they will not pass the SST to the end buyers. This is because the effect to the property price is likely to be much lower than 10 percent anyway. With the current market sentiment, competition is tight. Potential buyers do have more considerations. As for whether it’s GST or SST or TTT (tax, tax, tax), it matters not. What’s most important is whether the project we are buying has that potential to give us higher returns that the one time GST or SST yeah. As for thoughts that ALL developers in ALL locations are having a tough time, please rethink yeah. Just today, someone forwarded a queue of buyers since the day before for a project in Johor. Yes, you know that state where everyone who has NOT been there kept saying that nothing is happening there? Here’s an update not too long ago. Recent updates: Iskandar, Johor. Ferry, RTS and flights Happy believing, no matter what you may believe yeah. Just need to invest in places you love wherever it may be.
written on 30 July 2018
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