Govt needs to provide further housing aid to young M40 -- Tax expert
Last update: 07/10/2019
KUALA LUMPUR, Oct 7 -- Ernst & Young Tax Consultants Sdn Bhd has urged the government to provide further housing assistance to the young Middle 40 household income group (M40), as they could provide additional traction to the property market.
The tax expert said the government could extend the period of stamp duty exemption on the purchase of a residential property under the National Home Ownership Campaign (HOC) without a cap on property price.
"Secondly, the government could re-introduce personal relief on housing loan interest for a period of three consecutive years starting from the year of assessment 2020 to encourage the younger generation to own a house in Malaysia.
"While thirdly, it could provide double tax deduction on housing loan interest subsidised by employers to encourage private sector participation and increase property demand," the local corporate entity of the global EY organisation said in a statement today.
Besides the fiscal stimulus, Ernst & Young said the government should also consider market intervention in the unprecedented issue of over-supply and over-pricing of residential properties.
For the commercial sector, it said the government should continue to enhance infrastructure and support facilities in the outskirts of cities to facilitate commercial property decentralisation for balanced township development.
However, the introduction of the earnings stripping rules (ESR) on July 1 this year that limits deductibility of interest expenses against rental business income may put a dent in related-party foreign investments into Malaysia.
Specifically, it said the ESR may have an adverse impact on foreign investments relating to asset-backed securities, Islamic financing and other commercial arrangements by foreigners in the property sector.
"Hence, the government is strongly urged to consider expanding the ESR exemptions to the above financing arrangements for originator companies and special purpose vehicles that are carrying on a business and involved in raising foreign related-party finance in the real property sector," said the tax expert.
On the oil and gas sector, it said although the landscape in Malaysia is sound, it cannot control external factors which may impact the oil and gas landscape and pricing, such as the proposed Chinese tariffs on United States crude oil, or political issues.
"What we can do is to continue to support the industry domestically and consider the gaps in the international supply chain which Malaysia can focus on filling.
"One potential area is oil trading – with the Global Incentives for Trading (GIFT) programme announced in 2011, we took a big step towards providing a platform to attract oil traders.
"Eight years on, we should refine our focus on and promotion of this incentive to attract the industry’s biggest players," it added.
-- BERNAMA