Monday, March 08, 2010

DAP leader slams new RPGT rules

A DAP parliamentarian today urged the government to revert the filing of returns and the payment of Real Property Gains Tax (RPGT) to that practiced in 2007, before it was abolished.

NONE"Under the previous system, the vendor and purchaser submitted their respective returns within 30 days and RPGT would be paid upon the tax department issuing the notice for payment,” said Beruas MP Ngeh Koo Ham.

"The estimated RPGT payable will be retained by the purchaser's solicitors until then. In this situation, at least the purchaser is entitled to the interest earned if the tax department delayed in assessing and issuing the notice for payment," he reasoned.

RPGT was abolished in April 1, 2007, but was reinstated this year, enabling the government to impose a five percent tax on gains received from the disposal of a property acquired within five years.

Describing the new system as “unfair, cumbersome, and burdensome", Ngeh explained that the new RPGT rules require the purchaser to forward the returns and two percent of the purchase price to the income tax department within 60 days from the date of the Sale and Purchase Agreement.

Failure to do so would entail an additional 10 percent on this amount.

Gov't enjoying 'undue enrichment'

Ngeh, who is DAP's deputy secretary-general, noted that the two percent of purchase price very often far exceeds the five percent RPGT imposed.

"For example, if a property acquired at RM1 million is sold for RM1.1 million there is a gain of RM100,000. A sum of RM22,000 will have to be paid to the income tax deposit within 60 days.

"The tax payable is however, only RM5,000. A sum of RM17,000 will have to be claimed back from the income tax department later. From experience, it will take a long long time to claim back money from a government department.

"This constitutes undue enrichment to the government which does not pay interest on this additional sum paid," he explained in a press statement today.

He added that getting the refund and filling unnecessary forms will cost the parties time and money.

"This is unproductive for both the government servants and the additional staff that the solicitors and tax agents will have to employ," he said.

Also, he said there is uncertainty as what happens when a sale falls through, or if there is a dispute, or in the case where a sale is contingent on an event such as the requirement for the Menteri Besar's consent.

courtesy of Malaysiakini

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