Real Estate and GST

Q. (Also posted in EstateAgentExam.com)

How is GST imposed on properties, especially Commercial Property in Malaysia?

A.
There are two parts to this.

1. One is the GST on the service. 
2. Another is the GST on the Goods Sold. 

One is service and the other is the goods - the property. They are two separate things. 

First, GST on services rendered. It has been discussed in a separate post here.

Today is about GST on the Real Estate as "Goods", not "Services".

There are two categories, one is residential and another is commercial/land. Residential property sale and lease is exempted. Commercial/land above RM2 mio would require the payment of GST.

The other criteria are:

Based on the previous DG’s Decision, any individual person is considered as carrying out business if make a supply of more than two commercial properties or commercial land exceeding 1 acre and is liable to register with GST if his total annual taxable supply exceeds RM500,000.

So long as you supply less than three commercial properties or commercial land not exceeding 1 acre, it would be treated as not carrying out business even if the sale is more than RM500,000 in a 12 months period.

However, the above mentioned amendments added one more criteria (i.e.commercial property or commercial land worth more than RM 2 million ringgit at market price) to determine when a person is considered as carrying out business of supply of commercial property.

Any individual that supplies commercial property or commercial land worth more than 2 million ringgit at market price after 28 October 2015 shall liable to register for GST. Any late registration will be subject to penalty based on number of days late which capped at RM20,000.

However, the seller has to collect, not the agent or the lawyer or the purchaser. Next is the issue of input and output GST. Output tax is the RM6 of RM100 paid by purchaser. Input tax is the part you can claim back from Director General if you have paid for GST when acquiring the goods earlier on. If you had paid RM4 as GST for this property, you just need to pay the remaining RM2 for GST on this sale.

According to the latest “GST General Guide” (amended on 25 January 2017), the registered person may be allowed to claim input tax on the goods he holds at the time of registration based on the approved amount by the Director General.

NEXT is about Commercial RENTAL.

Yes, GST is imposed on rental collection for commercial properties. GST is charged if

• he is supplying any lease, tenancy, easement, licence to occupy or rent ; AND
• his annual turnover for such supply has exceeded the prescribed threshold in the period of 12 months.

The threshold is RM500,000.

Ref:

https://www.3ecpa.com.my/taxation-and-gst/gst-and-commercial-property-in-malaysia/