Sunday, December 27, 2009
Najib announces RPGT reversal
By Syed Jaymal Zahiid
KUALA LUMPUR, Dec 23 — Datuk Seri Najib Razak announced tonight a reversal of his government’s decision to reintroduce real property gains tax (RPGT) on January 1 for all transactions, amid concerns that it would hit long-standing homeowners and foreign investors.
Instead, the government has now decided the five per cent RPGT would only apply to property sold within five years of purchase.
The five per cent tax, which was announced under Budget 2010 in October, is normally imposed to curb speculation but due to its flat structure does not differentiate between homeowners who have been holding a property for 20 years or those who are flipping properties within one or two years for a profit.
The property sector was taken by surprise by the announcement and had expressed worries that it would have sent a message to potential investors that the government has not been consistent in its policymaking.
An exemption on the RPGT was given in 2007 by the then-Tun Abdullah Ahmad Badawi administration in order to boost the property development industry.
Its removal two plus years later with little warning could have heightened the feeling of uncertainty among investors.
But speaking at a dinner with the federation of Chinese Associations Malaysia tonight, Najib allayed fears from the business sector, many of whom are from the Chinese community.
[Najib (second left) and his hosts share a light moment during tonight’s dinner. — Picture by Jack Ooi ] He said the decision to backtrack on the implementation of the RPGT will likely cost the government RM200 million in lost revenue.
Apart from this, Najib also announced that the hospitality industry will enjoy a 60 per cent reinvestment allowance from the government, to be handed out to hotels undertaking investments for renovation and refurnishing.
He said that in line with this new policy, the government will extend the investment allowance for 15 years.
The announcements were made following requests made by the Federation of Chinese Associations for the government to help the property sector.
“I hope the Chinese community will respond to the announcements accordingly,” he said.
Najib also said that he hoped to see the Chinese reciprocate his gesture by helping him realise his “1 Malaysia” concept.