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The housing and local government ministry has clarified that residential properties sold under the Housing Development Act (HDA) remain exempt from the expanded sales and service tax (SST).
Its minister, Nga Kor Ming, said this covers all residential buildings, including serviced apartments with commercial land titles, provided they are intended for residential use and fall under the scope of the HDA.
“The SST exemption is determined by either the land title or the intended use of the property,” he said in a statement today after consulting with finance minister II Amir Hamzah Azizan.
The clarification comes after receiving feedback from industry players about the expanded SST framework that begins from July 1 and its possible impact on housing costs.
Groups like the Real Estate and Housing Developers’ Association (Rehda) and the Master Builders Association Malaysia had warned of cost pressures and disruptions to ongoing projects and businesses.
Under the new tax regime, a 6% service tax will be imposed on construction services for infrastructure, commercial, and industrial buildings, if the taxable value exceeds RM1.5 million annually.
Nga also addressed fears over cascading taxes, saying that a business-to-business (B2B) exemption mechanism ensures the service tax is imposed only once along the value chain.
He said the sales tax for basic construction materials such as cement, aggregates and sand remains at 0%.
Out of 400 tariff codes related to building materials, he said, tax hikes apply to only eight, including items like laminated glass and vats, affecting just 2% of materials.
Contractors may also separate material costs from service charges, allowing the SST to be applied solely to construction services.
“The housing and local government ministry remains committed to working with the finance ministry and key stakeholders to ensure fair tax implementation, protect homebuyers’ interests, and support a sustainable housing sector,” Nga said.
“The ministry remains committed to preserving housing affordability and protecting homebuyers’ interests under the revised SST framework.”
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