Great piece of news for house owners who intend to sell their property. The scrapping of the property gains tax would mean you get to pocket all the proceeds from the sale of your property, without having to share it with the government.
Quite a generous move by the Malaysian government, considering that the government will stand to lose tax revenue. However, this could actually boost the sluggish property market, as reports said.
Anyway, for you and me, it is good news and would certainly welcome it with open arms. One less headache to consider.
Previously, every Malaysian has one chance to be exempted from the property gains tax - on the sale of their first property. It applies to both gender, male and female, but the privilege for the girls will automatically be forfeited once the girl gets married. So, now it will be fair to both gender, which is good! 
Read on for the news report on the scrapping of the property gains tax.
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By Chan Tien Hin and Stephanie Phang
March 22 (Bloomberg) — Malaysia has scrapped capital gains tax on property and will offer incentives to entice investment into the nation’s southernmost state.
Companies investing in tourism, financial services and certain other industries in the state of Johor, which neighbors Singapore, will be exempt from corporate income tax for 10 years, Prime Minister Abdullah Ahmad Badawi told an investment conference in Kuala Lumpur today.
Abdullah wants to encourage more investment to help boost growth in Malaysia’s economy, which has been outpaced by Singapore for 21 of the past 30 years.
The government expects the 382 billion ringgit ($109 billion) redevelopment of Johor to create 800,000 jobs in the next two decades and turn the area into an international destination for businesses and tourists.
“The incentives are very good on paper,” said Tan Teng Boo, who helps manage $100 million at Capital Dynamics Asset Management in Kuala Lumpur. “Still, it will be crucial to ensure that the follow-through and implementation of the project is efficient.”
The Kuala Lumpur Property Index gained 2.7 percent at the 5 p.m. close, outpacing a 1 percent gain in the benchmark Kuala Lumpur Composite Index. Selangor Properties Bhd., a Malaysian property developer, climbed 3.2 percent to 3.82 ringgit, while IGB Corp. rose 2.5 percent to 2.5 ringgit.
The April 1 abolition of tax on gains from property sales, first imposed in 1975, may cost the government 200 million ringgit a year, according to estimates by Sia Ket Ee, an economist at OSK Research Sdn. Removing the tax, which makes up 0.2 percent of government revenue, will help lure more foreign investments, he said.
‘Definitely Good’
The property measures are “definitely good” for the economy, said Quek Leng Chan, a Malaysian billionaire whose assets range from the Hong Leong Group to local cement producer Tasek Corp. and is estimated by Forbes to be worth $2.9 billion.
Growth in Malaysia’s $147 billion economy is expected to accelerate to a three-year high in 2007, the central bank said yetserday. Southeast Asia’s third-largest economy is forecast to expand 6 percent this year after growing 5.9 percent in 2006, Bank Negara Malaysia said.
The current capital gains tax on property is 30 percent within the first two years, falling to 5 percent by the fifth year, according the Inland Revenue Board’s Website. For foreigners, the tax starts at 30 percent for the first five years, and drops to 5 percent in the sixth and subsequent years.
Property Investments
“This is very good for the property and construction sector,” Suhaimi Ilias, an economist at Aseambankers Malaysia Bhd. in Kuala Lumpur, said of the measures announced by Abdullah today. “All these are what the market has been waiting for.”
Abdullah’s proposals may spur private investment in Malaysia, which Mohd Effendi Norwawi, Minister in the Prime Minister’s Department, today said declined 2 per cent in the five years to 2005. Norwawi expects private investment to increase 11 percent in the five years to 2010.
Malaysia started easing rules on property investments by foreigners in December, fueling speculation the country may introduce more measures to reinvigorate home sales as the central bank lifted its key interest rate three times between November 2005 and April 2006 to curb inflation.
Home sales in Malaysia fell to 85,153 units in the first half of 2006, 3.4 percent lower than a year earlier, the Real Estate Housing Developers Association said.
Foreign direct investments also fell 15 percent to 15 billion ringgit in 2005.
Transforming Johor
The decision to scrap the tax “is very good for the property industry,” said Choong Khuat Hock, who helps manage 400 million ringgit at Kumpulan Sentiasa Cemerlang Sdn. in Kuala Lumpur.
“Malaysia’s properties are one of the cheapest in Asia and they needed an impetus to crystalize the value. It shows the government is flexible and welcomes foreign investment.”
Malaysia is attempting to spur the development of southern Johor state, connected to Singapore by two bridges, by improving the region’s infrastructure. Singapore is attracting about $6.6 billion of investments from two casino-resort operators including Malaysia’s Genting Bhd., Asia’s biggest gaming company by market value.
The measures announced today are the latest in a series of incentives to encourage companies to plow funds in the country.
Malaysia has also cut its corporate tax rate to 27 percent from 28 percent this year, and offered incentives for real estate trusts and Islamic finance, where Malaysia is the world’s biggest issuer of Shariah-compliant debt.
Johor Chief Minister Abdul Ghani Othman told reporters today he’s expecting $40 billion of foreign direct investment in seven years in the Johor project, the so-called Iskandar Development Region.
Abdullah unveiled his plans at Malaysia’s biggest investment conference, attended by local investors and fund managers from cities such as New York and London.
Posted September 22, 2007 
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