Specific Guidelines Needed for Relaxation in Foreign Property Ownership
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Lowering of the threshold for foreign ownership in property from RM1 million to RM600,000 may be appropriate in the short term, but specific guidelines are important in ensuring long-term sustainability and viability, said PwC Malaysia tax leader Jagdev Singh.
“Questions abound as to whether the relaxation of foreign owners should be limited to the secondary market or extended to the primary market (and) if there is a need for a minimum holding period as well as a limit in whom they can sell to,” he said in a statement on the 2020 Budget.
Finance Minister Lim Guan Eng yesterday announced that the government would lower the threshold on high-rise property prices in urban areas for foreign ownership from RM1 million to RM600,000 next year.
Jagdev said PwC Malaysia also welcomed the proposed revision of the real property gains tax (RPGT) imposed on disposal of properties after five years onwards for assets acquired before Jan 1, 2013.
"However, this is less straightforward compared to exempting all sales for properties held beyond 10 years," he said.
He said the 2020 Budget was also the first to provide clarity on Malaysia's approach in navigating the digital high-technology economy.
He said notable initiatives included customised incentives to attract Fortune 500 companies and global unicorns to invest RM5 billion each and create 150,000 high-quality jobs in Malaysia over five years, RM1 billion customised incentives for Malaysian businesses that export products and services globally which are expected to create 100,000 high-quality jobs, and a 10-year tax exemption for intellectual property-generated income from patents and copyright software based on the Modified Nexus Approach.
"These measures, coupled with a more customer-centric approach in attracting and facilitating there investments through InvestKL and Malaysian Investment Development Authority's role as an account manager, as well as the expeditious process of approval will hopefully differentiate us from our neighbours," he added.
Meanwhile, Ernst & Young Asean and Malaysia tax leader, Amarjeet Singh, said measures to encourage Malaysian individuals and corporate to embrace digitalisation were set to propel the country into the digital age, removing physical barriers and opening up access to markets, knowledge and opportunities.
The government also announced measures to build Digital Malaysia and will set aside RM21.6 billion for the National Fiberisation & Connectivity Plan (NFCP).
He said there was an expectation that increased private sector investments would translate into enhanced economic growth and a corresponding increase in overall tax revenue.
"No new taxes were introduced and the tax base was not broadened, save for a two-percentage point increase in the individual tax rate on taxable income exceeding RM2 million.
"Further, the government reiterated that the Goods and Services Tax would not be introduced," he noted.
He said the 2020 Budget “shows courage, foresight and conviction.”
“It sets to clear policy direction towards reducing reliance on government spending and encouraging private sector investments to grow the economy whilst introducing measures to ensure equitable and sustainable growth for the shares prosperity of the nation," Amarjeet said.