The Sarawak Housing and Real Estate Developers’ Association (SHEDA) urged the Government to defer
implementation of SST for the construction industry as SHEDA believes that the property market in Sarawak would be adversely affected by the implementation of the expanded Sales and Service Tax (SST) which is scheduled to come into effect on 1 July 2025. SHEDA President, Augustine C.H. Wong observed that even without factoring in the impact of SST, within the last 6 months alone, property developers in Sarawak have had to face rising labour and compliance costs related to newly-introduced policies such as e-invoicing, Foreign Workers Transformative Approach (FWTA) and the payment of levy in lieu of building Government-sanctioned social housing. With building materials costs already up by 20-30% pre-SST, Wong expected that the combination of SST and compounded interests would eventually push the selling
price of properties to a breaking point which is neither affordable nor sustainable for the market, potentially triggering significant hardship for M40 and B40 households. In addition, Wong also stressed the importance of ensuring that double taxation would not arise from the implementation of SST along the construction supply chain, from the property developer to sub-contractors. Referring to recently published reports, Wong welcomed the clarification by the Federal Housing and Local Government Ministry that all residential properties including serviced apartments intended for residential use shall
be exempted from the expanded SST. Wong commented that although the explanation provided was appreciated, more detailed information on the formula was required. In particular, Wong commented that the SST rate should not be applied across the board for mixed-development projects or shophouses as these projects comprise both residential and non-residential, as well as common are components. Only commercial components of such projects should be subject to SST, since all residential properties
are exempted. SHEDA requested clear guidelines to regulate the calculation as the results would also cascade into the property management sector. Until sufficient assurance is provided, such implementation would lead to inequitable outcomes for many stakeholders.
