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Friday, October 29, 2021

No more RPGT in 6th year; vehicle sales tax discount extended

 


BUDGET 2022 | The government will no longer collect real property gains tax (RPGT) on properties disposed of during the sixth year of ownership and onwards.

This will take effect next year under Budget 2022, according to Finance Minister Tengku Zafrul Abdul Aziz.

Zafrul said this will apply across the board for Malaysians, permanent residents and foreigners.

Previously, Malaysians and permanent residents must still pay RPGT of five percent on properties that they sell, even if they have owned them for more than five years.

Meanwhile, foreigners must pay 10 percent. This will no longer apply.

However, there’s no change of policy on the disposal of properties in five years or less.

Under the current system, Malaysians and permanent residents must pay a 30 percent tax on the profit they make from selling properties that they hold for less than three years.

This is reduced to 20 percent in the fourth year and 15 percent in the fifth year.

RPGT was introduced to avoid property speculation

For foreigners, the RPGT is 30 percent if a property is sold in the first five years of ownership.

The RPGT was introduced to avoid speculation of properties.

Meanwhile, Tengku Zafrul also announced that the sales tax exemption on completely knocked-down (CKD) passenger vehicles will be extended until June 2022.

He added that the 50 percent discount on sales tax for completely built-up (CBU) vehicles will also continue until June 2022.

The sales tax discount on vehicles was introduced in 2020 to help the automotive industry amid the Covid-19 pandemic.

The discount also helps the government to boost its excise duty revenue.

This is because the sales tax, at 10 percent, only makes up a small part of the government’s revenue from vehicle taxation.

The bulk of the government’s revenue comes from the excise duty imposed on vehicles, which can range from 65 percent to 105 percent, while import duty ranged from 0 to 30 percent.

Huge discounts on electric vehicles

More notably, Tengku Zafrul said the government is considering exempting electric vehicles from all taxes - excise duty, sales tax and import duty.

This could see electric vehicles become significantly cheaper.

"To support the development of local electric vehicles, the government is proposing to give full exemption on import duty, excise duty and sales tax for electric vehicles.

"An exemption on road tax of up to 100 percent will also be given to such vehicles.

"Furthermore, a personal income tax relief of up to 100 percent will be given for the cost of purchase, installation, rental, leases and fees of charging facilities for electric vehicles," the finance minister added. - Mkini

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