Malaysia property tax ammend - property stock to benefit

Prime Minister Najib Razak said yesterday a 5 percent capital gains tax on property will apply only to homes sold within five years of their purchase, government spokesman Akmar Hisham said today.
Najib “presented the perfect Christmas gift to the Malaysian property market,” ECM Libra Capital Sdn. said in a report today, maintaining its “overweight” rating on the industry. The move “sends an affirmative signal that the government will adopt an accommodative stance to support growth in the property sector,” ECM said.
The re-imposition of the capital gains tax was announced by Najib in October as part of plans to cut the budget deficit to 5.6 percent of gross domestic product in 2010 from a 22-year high of 7.4 percent this year. The tax was originally scrapped in 2007 to help clear a housing backlog.
Before the government removed the tax, the levy was 30 percent within the first two years, falling to 5 percent by the fifth year.
The decision to limit the scope of the tax means the government will have to forego about 200 million ringgit ($58 million) in potential revenue next year, the official Bernama news agency reported last night, citing Najib.
--With assistance from Manirajan Ramasamy in Kuala Lumpur. Editors: Richard Frost,  
source: businessweek