The Extinction of RPGT

Recently the government of Malaysia has abolished their RPGT (Real Property Gains Tax) on properties sold in Malaysia. On the upside, those who stand to benefit the most are of course people who are thinking of selling their property, fixer-uppers, those who would buy a dilapidated house, fix it up and renovate it and sell it for a quick profit, and those companies who are in the property development business. On the downside, expect property prices to sky rocket, perhaps as much as 25% in the short term.

The capital gains tax omission not only applies to real estate investments here, it also applies to stocks. As far as I know, Malaysia is one of the few countries in the world that does not have a capital gains tax on any profits gained from an increase in share price.

There is some speculation however that the government may be preparing to launch their GST (Goods & Services Tax) very soon and that is one of the reasons for the recent and sudden abolishment of the RPGT. This would mean that we consumers here would be paying more taxes when we spend our money for food, entertainment, and so on. Of course there will be some essential items that would not have GST but when it does come out, we all have to be more careful of our spending in Malaysia. Potentially though , during the national budget this year,the government could announce a reduction of income tax payments as well as corporate tax to compensate for the launch of the GST.

So before people start complaining about the GST and it’s implications, here is a quote from the Joyce Gon, a writer from The Edge Malaysia;

“So, before anybody starts complaining about another yet another tax, they must ask this question - would you rather pay tax as you earn or as you spend?”