The rule, which would have raised costs by up to 2 per cent, was supposed to take effect this year.
"We're thankful to the government for considering the plight of a multitude of stakeholders in the construction industry," said Master Builders Association of Malaysia (MBAM) president Ng Kee Leen.
Under Budget 2009, the government said it wanted to simplify stamp duty assessment. However, it turns out that industry players have to pay more.
From January 1 this year, they will have to pay 0.5 per cent duty on all construction services agreements that do not require collateral.
This covers consulting contracts, operation and maintenance contracts and facilities services contracts.
It means that a RM10 million construction contract will attract a total stamp duty of RM50,000. Previously, the stamp duty on an ordinary service agreement was just RM10.
On Wednesday, the Finance Ministry said from September 15 to December 31 2010, all service agreements will be imposed a flat stamp duty of RM50.
The government is only able to gazette the above ruling next Tuesday onwards. For application requests before the gazetted date, approval for stamp duty will be considered on a case-to-case basis under Section 80(1A) of the Stamp Act 1949.
MBAM told members to include the stamp duty cost in the contract. Contractors should also split the cost for materials and services as this will result in lower stamp duty.
After January 1 2011, all service agreements, including construction contracts, will be charged a stamp duty of 0.5 per cent of the total contract sum.
"We will continue to appeal to the government to consider maintaining the RM50 flat stamp duty for all construction contracts beyond 2011," Ng said.
By Business Times (by Ooi Tee Ching)
Under Budget 2009, the government said it wanted to simplify stamp duty assessment. However, it turns out that industry players have to pay more.
From January 1 this year, they will have to pay 0.5 per cent duty on all construction services agreements that do not require collateral.
This covers consulting contracts, operation and maintenance contracts and facilities services contracts.
It means that a RM10 million construction contract will attract a total stamp duty of RM50,000. Previously, the stamp duty on an ordinary service agreement was just RM10.
On Wednesday, the Finance Ministry said from September 15 to December 31 2010, all service agreements will be imposed a flat stamp duty of RM50.
The government is only able to gazette the above ruling next Tuesday onwards. For application requests before the gazetted date, approval for stamp duty will be considered on a case-to-case basis under Section 80(1A) of the Stamp Act 1949.
MBAM told members to include the stamp duty cost in the contract. Contractors should also split the cost for materials and services as this will result in lower stamp duty.
After January 1 2011, all service agreements, including construction contracts, will be charged a stamp duty of 0.5 per cent of the total contract sum.
"We will continue to appeal to the government to consider maintaining the RM50 flat stamp duty for all construction contracts beyond 2011," Ng said.
By Business Times (by Ooi Tee Ching)
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