Disclaimer

This book is designed to provide information on the GST only. This information
should not be deemed as a professional advice. In the case of a need for any such
expertise consult with the appropriate professional. This book has not been created
to be specific to any individuals or organizations situation or needs. Every effort
has been made to make this book as accurate as possible. However, there may be
typographical and or content errors. Therefore, this Ebook should serve only as a
general guide and not as the ultimate source of subject information. The author and
publisher shall have no liability or responsibility to any person or entity regarding
any loss or damage incurred, or alleged to have incurred, directly or indirectly, by
the information contained in this book. You are advised to refer to Customs gst.
customs.gov.my/ for further clarifications or latest updates.

GST

IMPACT ON PROPERTY
INVESTORS/OWNERS
WHAT IS GST?
Goods and Services Tax (GST) is
a multi-stage tax on domestic
consumption. GST is charged on
all taxable supplies of goods and
services in Malaysia except those
specifically exempted. GST is also
charged on importation of goods
and services into Malaysia.
Payment of tax is made in stages by
the intermediaries in the production
and distribution process. Although
the tax would be paid throughout the
production and distribution chain,
only the value added at each stage is
taxed thus avoiding double taxation.
In Malaysia, a person who is
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registered under the Goods and

Services Tax Act 2014 is known as
a registered person. A registered
person is required to charge GST
(output tax) on his taxable supply
of goods and services made to
his customers. He is allowed to
claim back any GST incurred on
his purchases (input tax) which are
inputs to his business. Therefore,
the tax itself is not a cost to the
intermediaries and does not appear
as an expense item in their financial
statements.

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G S T - IMPACT ON PROPERTY INVESTORS/OWNERS

DEFINITION OF TAXABLE PERSON

According to the Malaysian Customs
Department, a taxable person is:

Any person who makes a taxable

supply for business purposes and
the taxable turnover of that supply
exceeds the threshold of RM500,000
is required to be registered for GST.
Taxable turnover means the total
value of taxable supply for a period
of 12 months excluding the amount
of GST.
A taxable person can be an individual,
a sole proprietor, a partnership,
a property holding company or a
company.
GST is to be levied and charged at
the proposed rate of 6% on the value
of the supply. GST can be levied
and charged only if the business is
registered under GST.
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It can be simplified as per chart

below.

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G S T - IMPACT ON PROPERTY INVESTORS/OWNERS

TYPE OF SUPPLY?

HOW GST AFFECTS PROPERTY

INVESTORS /OWNERS
Property investors are affected by
GST in various stages of the value
chain i.e. from the time of purchase,
getting financing, execution of legal
documents, to the sale and rental of
property, or when engaging a real
estate agent and in the disposal of
property.
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Below are summary of how GST has

an impact on the property investor.
GST on Property Transactions
Real estate refers to land and
everything attached to it, whether
on or below the surface. Land
includes buildings, trees, vegetation
and other structures and objects
in, under or over it. Real property
is the rights to use real estate and
includes activities concerned with
ownership, use and transfers of
immovable property.
I.

Deposit/ Booking Fees

In order to secure the purchase of

the property, developers are allowed
to collect deposit or booking fees.
Deposit or booking fees given in
respect of a supply is not regarded
as payment and is not subject to
GST. However, if the developer
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G S T - IMPACT ON PROPERTY INVESTORS/OWNERS

applies such deposit or booking fees

as consideration or part payment,
then they are subject to GST.
II. Administrative Services
Administrative services such as
provide endorsement of deed of
assignment are subject to GST
because administrative fees are
standard rated supplies.
III. Interest for late payment
Interest payment related to late
payment is regarded as a penalty
and is considered to be out of scope.
Therefore, it is not subject to GST.
IV. Commissions
All commissions derived from the
sale of properties are subject to GST,
regardless whether the property is
a taxable or exempt supply.
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V. Stamp Duty
GST is exclusive of stamp duty
payable on the transfers of property.
VI. Sale & Lease of property
If the property is a standard rated
supply such as commercial property,
it is subject to GST. If the property is
an exempt supply such as residential
premises, then the disposal is not
subject to GST.
VII. Progressive payment
You have to account for GST
at the various stages of the
progressive/ scheduled payment
for uncompleted nonresidential
properties.
Example: A purchaser enters
into an agreement to buy a
commercial building which is under
construction. The sales price of the
building is RM500,000. The payment
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is scheduled for four successive

interval payment and the respective
amounts to be paid are as follows:

VIII. Car Park

FREE Car park from Developer as
stated in the SPA for residential
property is not subject to GST.
However, purchase of an additional
car park in a separate car park
agreement is subject to GST.
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IX. Fixtures & Fittings

All fixtures and fittings installed
upon vacant possession for both
residential
and
commercial
properties are subject to GST.
X. Service charges & sinking
fund
Service charges & sinking fund
for residential properties are not
subject to GST but for commercial
property it is subject to GST.
XI. Water & TNB Deposits
Deposit for supplies of water and
electricity is not subject to GST if
the money received is a deposit for
purpose of security and does not
form as part of consideration.
XII. Quit Rent & Assessment
Quit rent and assessment are out of
scope supply.
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Tenancy
General rule:

LEGAL FEES AND CHARGES

All charges and fees, excluding

disbursements such as land registry
fee, stamp duty etc imposed for
services provided will be subject to
GST.
These include fees in respect of
contentious or non-contentious
business, preparing and completing
agreements,
conducting
and
completing transactions, preparing
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filing or witnessing of miscellaneous

documents. It also includes charges
such as miscellaneous expenses,
cost of extra work, travelling
or
accommodation
expenses,
allowances for the time of the
solicitor and his clerk. General
expenses such as telephone, telex,
postage, advertising, and stationery
charges are incurred in the course
of providing services to the client
and shall be treated as business
costs. They are not to be treated as
disbursements for GST purposes.

Non-billed income such as oath

fees received by the legal firm or by
individual solicitor under GST.
Non-billed income such as oath
fees received in respect of oaths
administered by a solicitor in sole
practice or a partner in a legal firm
are regarded as consideration for
services supplied in the course of
business, and thus is subject to GST
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REAL ESTATE AGENTS & VALUER

Agent Fees/Commission
Estate agents, negotiators and
brokers would generally receive
fee (commission) for their services
in performing estate agency work
(i.e. buying, selling or leasing of
properties) from their clients who can
be the buyers, sellers, landowners
or tenants. The provision of such
services in relation to estate agency
work is a taxable supply regardless
of whether the property is residential
or non-residential.
Estate agents, negotiators or
brokers have to charge GST on the
fee that they receive regardless
whether the property is a taxable or
exempt supply
Agent
Fees/Commissions
for
Aborted Sale
The fee or commission received is
still subject to GST because it is the
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payment for the supply of services.

Valuation Services
Valuers or appraisers would impose
certain fee for their services in
performing their valuation work
to their clients. The provision of
such services in determining the
value of fixed property, executing
the feasibility studies or providing
expert advice on property is a taxable
supply regardless of whether such
property is residential or nonresidential. Thus it is subject to GST
.
FINANCIAL INSTITUTIONS
Provisions of Loan Interest on
Loan
The loan provided to the borrower
by the moneylender is an exempt
supply. As a consideration for the
supply of the loan, the borrower
is required to make installment
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payment of the principal amount

plus the interest to the lender. This
interest payment is not subject to
GST. Loans or advances given can be
secured or unsecured. The provision
of a security for such debt (if any) is
also an exempt supply.
Loan Conversion
Services of loan conversion where
terms of loan (e.g. amount of loan)
are being changed or loan revision
(e.g. changing the original terms
and conditions of loan) are out of
scope supplies. Therefore, they are
not subject to GST.
Loan Transfer to another Bank
(Change Bank)
The transfer of a loan from
one moneylender to another
moneylender is an out of scope
supply. Therefore, it is not subject
to GST.
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Loan Renewal
The renewal of a loan i.e. granting
of another loan after the maturity
of the original loan is reached is an
exempt supply and therefore it is
not subject to GST.
Loan Assignment
Loan/credit assignment to another
assignee is an out of scope supply
and therefore it is not subject to GST
Other Bank Charges
Attestation fees on attesting the
money-lending agreement by the
lawyers .GST should be imposed on
the attestation fee by the attester if
he is a registered person.

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Charges for Loan Account statement

Or Any Documents on Loan
For example if you request for a
copy of the bank statement and the
bank charge you RM3 per copy. This
charges is subject to GST as they
are standard rated supplies.

For more property updates

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