Residential properties sold under the Housing Development Act (HDA) will be exempted from the update Sales and Services Tax (SST), following concerns from the construction industry over rising costs.

Housing and Local Government Minister Nga Kor Ming said the exemption applies to all residential buildings, including serviced apartments built on commercial land, provided they are intended for residential use and fall under the HDA.

He said this following discussions with Finance Minister II, Datuk Seri Amir Hamzah Azizan after industry players raised concerns about the impact of cascading taxes under the revised SST framework.

Nga said the issue will be addressed through business-to-business (B2B) exemptions, ensuring that the service tax is only applied at a single stage.

The Finance Ministry clarified that basic construction materials such as cement, sand and aggregates will continue to be taxed at 0 per cent. Of the 400 tariff codes covering building materials, only eight will see an increase, affecting items such as laminated glass, netting and vats.

“This will affect only two per cent of the total building material tariff codes,” he said.

Nga added that contractors may also separate material costs from service charges, allowing the service tax to apply solely to construction services.

He noted that the government remains committed to balancing fiscal reforms with housing affordability.

“KPKT will continue engaging with the Finance Ministry and stakeholders to ensure fair implementation of tax policies and protect the interests of homebuyers,” he added.

Source: Bernama