Rehda calls for exemption of GST on construction materials

KUALA LUMPUR: The Real Estate and Housing Developers’ Association (Rehda) is calling for the exemption of the GST on construction materials for the development of affordable housing as part of the association’s wish list for the upcoming Budget 2018.

While Rehda supports the introduction of the GST to make taxation more comprehensive, efficient, transparent, and business-friendly, the imposition of the GST has resulted in increased input prices.

As residential properties are categorised as an exempted supply, the disallowance of input tax credits has added on to the cost of development.

Rehda president Datuk Seri FD Iskandar Mohamed Mansor said at a luncheon yesterday that this was the first time Rehda had proposed for a GST exemption on construction materials for houses priced RM500,000 and below.

“What I want to request from the Government is to please waive the GST on construction materials for the affordable housing category.

“This move would then attract more developers to build affordable homes, addressing the undersupply.

“Currently, developers are paying the 6% tax on cement, tiles, bricks and roofing materials, among others,” he said, adding that it would be a matter of enforcement to ensure that the GST waiver goes to affordable developments.

“From the advertising permit and developer licence obtained by developers, there will be a price range of the properties sold.

“The GST waiver or exemption should not be given to developers whose properties are priced above RM500,000,” said FD Iskandar.

Themed Negaraku: Shaping the Future, the Budget 2018 wish list includes several proposals by Rehda to the Government.

It is seeking measures to facilitate home ownership such as stamp duty exemption, special end-financing schemes, increasing the affordable housing supply and the establishment of more incentives for the adoption of industrialised building systems.

To facilitate home ownership, Rehda proposes the disbursement of the 10% downpayment from the Employees Provident Fund (EPF) to be channelled directly to the developer, without buyers having to pay the amount from their own savings or other sources.

Although EPF contributors are allowed to utilise funds in their Account II to cover the 10% downpayment, buyers will have to currently use their own money first for the downpayment.

Rehda has also proposed that the My Deposit scheme be continued, with a higher allocation to benefit more first-time buyers in addressing the issue of high entry costs.