“Residential properties under Malaysia’s HDA are exempted from the revised SST, following concerns from developers. Key building materials remain zero-rated, and only 2% of tariff codes are affected.“
Putrajaya, 16th June 2025, 10.08am – Residential properties developed under the Housing Development Act (HDA) will be exempted from the revised Sales and Services Tax (SST), following growing concerns from the construction sector over rising project costs.
Housing and Local Government Minister Nga Kor Ming said the exemption will apply to all residential units—including serviced apartments on commercial land—as long as they are designated for residential use and governed by the HDA.
The announcement comes after discussions with Finance Minister II Datuk Seri Amir Hamzah Azizan, who met with industry stakeholders to address anxieties around cascading tax effects introduced under the updated SST regime.
“Concerns raised by developers and contractors have been taken seriously,” said Nga. “The Finance Ministry has agreed to a business-to-business (B2B) exemption model to ensure service tax is only applied once and does not compound throughout the supply chain.”
The Finance Ministry also clarified that core building materials—including cement, sand, and aggregates—will continue to be zero-rated, maintaining cost stability for essential construction inputs.
Out of 400 total tariff codes for building materials, only eight categories will see a tax increase, affecting selected items such as laminated glass, wire netting, and vats. Nga emphasized that this represents just 2% of the total codes, minimising the overall impact.
Contractors will also be permitted to separate material costs from service charges, so that SST applies solely to services rendered, offering further flexibility in project budgeting.
Nga reaffirmed the government’s commitment to housing affordability and fiscal reform, noting that the Ministry of Housing and Local Government (KPKT) will continue to work closely with the Finance Ministry and developers to ensure tax policies are fairly implemented without burdening homebuyers.
