by DayakDaily Team
KUCHING, July 2: The recent implementation of the expanded Sales and Service Tax (SST) and the rollout of mandatory e-invoicing are placing significant financial and operational strain on Sarawak’s property development and construction sector, according to Sarawak Housing and Real Estate Developers’ Association (SHEDA) advisor Dato Sim Kiang Chiok.
Without proper support for the industry, these changes could stifle growth and place significant strain on both companies and consumers, he cautioned in a statement.
“Since the introduction of the expanded SST, we have already experienced noticeable cost increases across multiple areas within the construction sector due to the expanded SST. Specifically, the cost of building materials has gone up, with fees for professional services such as architects, engineers, and other consultants who are already subjected to SST.
“Additionally, construction services provided by subcontractors are also affected, which directly adds to our overall project costs,” Sim said.
In addition to tax-related expenses, he pointed out that contractors must factor in the recent requirement to contribute an additional 2 per cent + 2 per cent EPF for foreign workers, if any are employed, which further drives up operational expenses.
“These additional costs inevitably impact our budgeting processes, forcing developers to adjust tender pricing upwards to maintain profitability. It creates a challenging situation where we need to balance competitiveness with the need to cover these new expenses,” he said.
Sim also raised concerns about the mandatory e-invoicing system, which he said introduces additional layers of administrative work and compliance.
“Our accounting and administrative teams now face increased workloads to ensure each invoice complies with the new e-invoicing requirements. This means investing time and resources in updating accounting systems, staff training, and ensuring seamless integration of e-invoices with our financial records.
“Furthermore, the increased compliance cost is a real concern, particularly since companies are still obligated to submit annual accounts to the Inland Revenue Department (IRD) for tax computation despite these new requirements,” he highlighted.
While the exemption for companies with turnover below RM500,000 will help micro-enterprises avoid these burdens, he emphasised that medium and larger firms must absorb the added cost of system upgrades and procedural changes, which are especially challenging in an industry already operating on tight margins.
“In my opinion, the expanded SST combined with mandatory e-invoicing essentially mirrors the complexity of the previous GST system, but with even more cumbersome procedures.
“Unlike GST, SST does not provide tax credits along the supply chain, which opens the possibility of double taxation at multiple stages and increases the final cost borne by the consumer without clear visibility of tax components in pricing.
“This lack of transparency means buyers cannot see where taxes are applied, creating confusion and undermining the efficiency such systems aim to achieve,” he said.
“Overall, these measures are likely to push construction costs higher, which will eventually contribute to increased property prices and a higher cost of living.
“Without proper support for the industry, these changes could stifle growth and place significant strain on both companies and consumers,” Sim pointed out. – DayakDaily
