Builders' body urges govt to reconsider SST on construction sector
PETALING JAYA : The Master Builders Association Malaysia (MBAM) has called on the government to reconsider expanding the sales and service tax (SST) to the construction industry.
In a statement, MBAM president Oliver Wee said the construction industry was already subject to multiple layers of taxation across various aspects of project execution, including building materials, labour and equipment.
Wee said introducing a new tax – especially with the potential for retrospective application – would seriously disrupt existing contractual obligations, budgets and project timelines.
'Given the critical role the construction industry plays in national development and economic stability, MBAM respectfully appeals to the government to reconsider the imposition of SST on construction services,' said Wee.
'It is essential to maintain a stable, predictable, and sustainable operating environment for the industry to continue supporting Malaysia's growth and development.'
Wee said if the implementation of the 6% SST was 'inevitable', MBAM was of the view that the rate be reduced from 6% to 4% due to the large contract values in the industry.
He suggested that the SST should only be levied on the service portion of the contract value, with the non-service portion – including building materials and other hardware – to be exempted.
Wee also hoped Putrajaya would consider postponing the introduction of the SST on the construction industry as the July 1 implementation date provided insufficient lead time for the industry to respond.
He said a reasonable grace period must be granted to allow all stakeholders to make necessary adjustments and financial preparations.
The finance ministry yesterday said an expanded sales and service tax would be implemented from July 1, which will see a sales tax of 5%-10% imposed on selected and non-essential goods.
The service tax will be expanded to include new services such as construction, rental or leasing, finance, private healthcare, education and beauty.
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