Lim Guan Eng speaks to reporters in Parliament December 10, 2018. — Picture by Firdaus Latif

KUALA LUMPUR, Dec 30 — The base Real Property Gains Tax (RPGT) will not apply to homes under RM200,000 and property transactions finalised before January 1, Finance Minister Lim Guan Eng said today.

Expanding on his announcement of a minimum 5 per cent RPGT for Malaysians and 10 per cent for foreigners when tabling Budget 2019, he said this will exclude low-, low-medium cost and affordable housing priced below RM200,000 and sold after the fifth year of ownership.

“During the tabling of the Budget, the government has agreed to increase RPGT rates on profits generated from disposing real properties and shares from real estate companies after five years.

“However the government is concerned about the people’s welfare and wants to ensure Malaysians are not burdened with the RPGT imposed,” he said in a statement today.

He also clarified that the tax on property sold five years after purchase will not apply if the Sales and Purchase Agreement is finalised before Jan 1.

On the calculation of property gains for units purchased before 2000, Lim said his ministry will use the market price on January 1 of the year as the initial point of valuation.

In Budget 2019, Lim announced a minimum RPGT that applies perpetually. Under the previous structure, the tax is only levied on property sold within five years of its previous purchase.

In the same statement, Lim said registered professional service providers will be exempt from the service tax for intra-industry transactions, also beginning January 1.

“For example an advocate and solicitor offering legal services to another advocate and solicitor will be exempted from service tax.

“The exemption announced in Budget 2019 is aimed at preventing rising cost due to multiple taxation and ensuring competitiveness in local services industries,” he said.

The government has also extended the exemption to taxable services imported by any Malaysian company that falls under the same professional services group, with the exemption vested through the minister’s authority.