The Cabinet today passed amendments to the Specifically Selected Goods and Services Tax Act that, if passed by the Legislature, would help foster a healthier real estate market, provide fairer taxation, and promote long-term, stable economic growth.
According to the Ministry of Finance (MOF), this "luxury tax" as it is better known, was introduced on June 1, 2011. Since then, it has proven to be effective in curbing short-term speculation and stabilizing the housing market, although some cases of unfair taxation still exist.
With upward pressure remaining on real estate prices and economic uncertainties lingering at home and abroad, the MOF consulted researchers and experts in various sectors and proposed the following amendments to the act:
• To curtail speculation on industrial district properties within non-urban areas, the list of goods subject to luxury tax should be expanded to include "non-urban industrial land for which a construction permit may lawfully be issued." (Article 2)
• To prevent unfair taxation, certain homeowners who change houses for self-use should be exempt from such taxes. A general rule regarding other goods approved by the MOF will be added. The amended act should also be applicable to those cases that are either not currently being assessed or pending final decision. (Article 5)
• The enforcement date for the amended act should be stipulated. (Article 26)