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Remove stamp duty, urge construction industry players
05/06/2009 The Star

KUALA LUMPUR: The construction industry has appealed to the Government to reconsider its decision to impose stamp duties on service agreements as it is burdening the sector.

The Government had imposed a duty of 0.5% of the contract value effective Jan 1, covering, among others, loans, services and equipment lease agreements.

Previously, the stamp duty chargeable was fixed at a nominal sum of RM10.

Master Builders Association Malaysia (MBAM) president Ng Kee Leen said such an increase in the cost of stamping charges had resulted in an upsurge in construction costs.

“For instance, a conventional RM10mil construction contract will now attract an ad valorem duty of RM50,000 compared with RM10 previously,” he told a press briefing yesterday.

He said the impact of stamping all agreements including sub-contracts and out-sourcing agreements at 0.5% of the contract value was exponential.

“This is because the nature of the construction industry with multiple levels of sub-contracting works of construction, engineering, labour, procurement, transportation and maintenance,” Ng said.

“More importantly, we do not want the extra cost to trickle down to consumers.”

“The association also believes that the imposition of the additional stamp duty on construction contracts is inconsistent and counter productive to the policy and objectives of the stimulus package to help drive the economy out of the financial crisis,” Ng said, noting that the construction industry had been hit by the economic slowdown, registering only a 0.6% growth in the first quarter.

“It is expected that the effect of the stimulus package will be only the felt by the third quarter of this year,” he added.

The Building Industry Presidents’ Council has also written a letter to the Finance Ministry asking for the issue to be resolved.

“We need the changes to be made fast as it is affecting the cost of doing business,” said Ng, who is also a member of the council.

Ng noted that neighbouring countries like Singapore did not impose stamp duties on service contracts while Indonesia only imposed a nominal sum of about RM1.

Also present were the Malaysian Institute of Architects, Association of Consulting Engineers Malaysia and the Malaysian Indian Contractors Association which all supported the call made by MBAM.


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