GST play for estate agents

GEORGE TOWN (Aug 18): The Goods and Services Tax (GST) implemented in April this year is affecting property players and estate agents.

Royal Malaysian Customs senior assistant director Lee Wing Onn said that estate agents, negotiators and brokers would generally receive a commission for their services in buying, selling and leasing of properties for their clients.

“The provision of such services in relation to estate agency work is a taxable supply regardless of whether the property is residential or non-residential, and estate agents, negotiators or brokers have to charge GST on the fees they receive if the service rendered is in relation to a property located in Malaysia,” said Lee.

He said this at a public talk on the impact of GST on properties at the Malaysian Secondary Property Exhibition (Maspex) 2015 held in Penang last week. Maspex 2015 was organised by the Malaysian Institute of Estate Agents.

In his talk, Lee also stressed on the difference between “disbursements” and “reimbursements” when it comes to GST charges for estate agents.

He explained that disbursements, which are the amounts agents pay to third parties on behalf of their client, are not subject to GST. 
However, reimbursements, which are the amount billed by third parties to the agents and are part of the services rendered by the agents to their clients, are subject to GST, said Lee.

He added that GST-registered estate agents are entitled to claim the input tax on the output tax that is charged to their clients.

GST law also requires agents to issue a tax invoice within 21 days of the date of completion of their services.

“In the event the client does not settle the invoice within the stipulated payment terms, the agent may have to pay the GST portion first or, in extreme situations, the agent may need to classify the non-receipt of payment as a bad debt, and claim back the GST that was paid,” said Lee.

He added that in event of non-payment on GST dues by the agent, the maximum fine is RM15,000.