The Royal Malaysian Customs has issued its first GST Public Ruling for the year on "Commercial Residential Premise", a term which is not defined in the GST Act. The Ruling deals with GST treatment on sale and rental of SOHO, SOFO, SOVO, Serviced Apartment, Commercial Suites etc.
Below are some extracts from the Public Ruling: The commercial-residential premise is a strata title property developed for residential purposes on a commercial land. It can function both as residential and commercial use if it is approved by the relevant Local Authority.
The supply of all commercial properties is treated as a taxable supply and subject to 6% GST. However, if ALL of the following 4 criteria are met, the supply shall be exempt: 1. Planning Permission is approved and issued by any relevant local authority for mixed development purposes that is for both commercial and residential development. 2. Layout plan for the building is approved for dwelling purpose. 3. The Housing Development Licence is issued under the listed Housing Development Act/Ordinance. 4. The Advertisement and Sale Permit, and Sale and Purchase Agreement is issued under the listed Housing Development Rules/Regulation.
If the commercial residential premise is approved solely for "residential useâ€, the sale of the commercial residential premise is exempted from GST. On the other hand, if the premise is approved solely for "commercial useâ€, the sale of the commercial residential premise will be subjected to 6% GST.
Sub sale or second-hand sale of the commercial residential premise will be subjected to 6% GST if the usage of that premise was originally used for a commercial activity AT THE TIME WHEN THE SUPPLY IS MADE.
Any lease, tenancy or rent of commercial residential premise is a supply of service. If a commercial residential premise is for residential purpose, the supply is an exempt supply. On the other hand, if any lease, tenancy or rent of commercial residential premise is for commercial purpose, it is subject to 6% GST.
Disclaimer: The extract above are meant to provide a general overview and is not meant to be exhaustive