Sime Darby Property says Rehda in talks with govt on tax on construction services

• The company is still watching and assessing the potential impact on its new projects, group managing director Datuk Seri Azmir Merican said at a post-earnings briefing. For now, he reiterated that the company remains on track to achieve its sales target of RM3.6 billion for 2025.

KUALA LUMPUR (Aug 22): Sime Darby Property Bhd (KL:SIMEPROP) said the Real Estate and Housing Developers' Association (Rehda) is still in talks with authorities on the expansion of the sales and service tax that raised costs for developers.

The company is still watching and assessing the potential impact on its new projects, group managing director Datuk Seri Azmir Merican said at a post-earnings briefing. For now, he reiterated that the company remains on track to achieve its sales target of RM3.6 billion for 2025.

“We still need more clarity on how to address it between us and our contractors,” Azmir said. “We want to understand it a little better and, once we do, we can work with our contractors to achieve better alignment and determine the extent of the impact.”

Starting July 1, the government will impose a 6% tax on construction services for infrastructure, commercial and industrial projects worth over RM1.5 million a year. Residential buildings, housing-related utilities and fixed-price contracts, however, are exempt, with a 12-month grace period.

Still, there are concerns that developments on commercial land, such as serviced apartments in mixed-use projects in urban locations, would be subjected to the tax and lift housing prices for buyers, according to Rehda.

Azmir was responding to questions on whether the tax expansion could dampen buyer demand or cause delays in planned launches.

“Rehda has taken the lead to discuss this with the authorities. I don’t want to speculate on the impact until this lands,” he said. “Of course, if the 6% rate applies, it will have an impact,” he said.

For the first half ended June 30, 2025, Sime Darby Property recorded RM2.02 billion in total sales, with 40% contributed by industrial developments, mainly from Hamilton Nilai City, Serenia Industrial Park, Elmina Business Park and Bandar Bukit Raja.

Landed homes made up 25%, high-rise residential 22%, commercial 10%, and the rest came from non-core land sales.

Shares of Sime Darby Property closed unchanged at RM1.51 on Friday, giving the property developer a market capitalisation of RM10.27 billion.

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