The following summary of the simulation results is based on three different possible scenarios as follows:
(i) Assuming that the sub-contractor, main contractor as well as the property developer will maintain their original selling prices but will add on a 6% GST to arrive at their final selling price to their customers wherever GST is applicable;

(ii) Assuming that the sub-contractor, main contractor and the property developer will adjust their selling prices according to the actual costs incurred but retain the original profit margin percentage which they used to achieve.























In addition to this, they will add on 6% GST to arrive at the final selling price to their customers wherever GST is applicable; and

(iii) Assuming that the sub-contractor, main contractor as well as the property developer will adjust their selling prices according to the actual costs incurred but retain the actual profit which they used to achieve (as opposed to profit margin in [ii] above).

In addition to this, they will add on 6% GST to arrive at their final selling price to their customers, wherever GST is applicable.

Based on the simulation above, you will note that, with the implementation of GST come April 1, 2015, the estimated final selling price of residential properties as well as non-residential properties will increase accordingly.

However, do note that the above simulation is done with the assumption that all the supply chain entities have the same mind-set when it comes to adjusting their prices according to the scenarios mentioned above. In the event of any party adopting a different approach, the percentage of increase in prices should be changed accordingly.

In a nutshell, given the above GST outcomes for the supply of residential and commercial properties, we can almost be sure that the chances of property prices coming down in the near future should be close to zero.

Hence, will it be worthwhile to invest now rather than later if the opportunities permit?

>> Fennie Lim heads the Crowe Horwath KL Tax Division and has been in the tax profession for the last 22 years. She has a wide range of experience in tax compliance, tax advisory and indirect taxes, and has advised many large local and multinational clients on complex tax engagements.


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