It is now the SST era – what do YOU need to know?

Helen ChanNews

SST has taken effect …

Yes, things have certainly changed much for the Malaysians recently, especially with the new Malaysian Government in the picture.  All are hoping for better times ahead and a brighter future for all. One of the significant changes is the Sales and Services Tax (SST), which has been reintroduced effective 1 September 2018, 3 years after the Goods and Services Tax (GST) started on 1 April 2015. 

A tax amount of 5% and 10% imposed on the sale of goods, and a 6% levy on services were enforced. Such are enforceable on taxable goods manufactured by an individual or organization with an annual turnover of more than RM500,000 ($121,000) and also on taxable goods imported into Malaysia.

The new Malaysian Government believes that the SST is a more suitable tax regime for the upper-middle income economy and thus benefits and serves the Consumers better. This decision to revert to the SST is expected to result in a higher disposable income, due to relatively lower prices in most goods and services. The choice will be in the Consumers’ hands, namely pay service taxes based on their affordability and cability.

Furthermore, it was known that the scope of the GST, which admittedly was comprehensive and covered a huge area, but the thing was – too wide an area. While it was able collect a significant and sustainable sum for Malaysia, unfortunately, it was not people-friendly. The SST, on the other hand has a more narrowing scope, therefore will relieve the Consumers more.

So in short, SST is needed by the people.

Having said this, as most people would conclude that there is always two sides to a coin. And so the debate still goes on …

Anyway, here are several things that one should know about SST (source from Dylan Tan – https://www.businessinsider.my/sales-and-services-tax-sst-malaysia/) :

The number of goods exempted from SST is 10x more than GST:

Wow!

When GST was first implemented in the year 2015, only 545 consumer items were exempted, which was charged at 6%. With SST, a total of 5,443 items have been exempted.

Some daily essentials are exempted from tax:

You would like to know that such items exempted from sales tax include fresh food such as meat, eggs, vegetables and fruits. Other daily essentials like rice, coffee, tea, milk powder, sugar, palm and coconut cooking oil are also spared.

There will also be no sales tax imposed on medicines and pharmaceutical products, as well as personal hygiene products like diapers and sanitary pads.

With regards to transportation, vehicles including bicycles, motorcycles below 250cc and forklifts, petrol and diesel will not be taxed.

Items made in or imported into duty-free islands of Langkawi, Labuan and Tioman are also exempted.

These are great news indeed!

But you’ll still need to pay 5 or 10% sales tax on these items:

But wait …

Items liable for 5% sales tax include food products like olive, sunflower and groundnut cooking oil, butter and three-in-one coffee.

Mobile phones, cordless phones and laptops will also be subjected to the same amount of tax.

Items that will carry a 10% sales tax include shellfish, canned drinks, household electrical appliances, toilet paper, tissue, and cosmetics. Cars and motorcycles exceeding 200cc will also be similarly taxed.

Service Tax: 

Services provided by hotels, insurance companies, telcos and professionals like lawyers and accountants are subject to a 6% service tax. However, it is payable only if these businesses have an annual revenue that exceeds RM500,000.

For food and beverage outlets, only those with an annual revenue of over RM1.5 million will need to pay the service tax.

A separate annual service tax of RM25 per credit card will also be levied on card users.

Less businesses will have to pay SST compared to GST:

It was announced that the number of service tax-applicable businesses is 43.49% compared to 65.85% that were GST-applicable. So it is a good thing!

 

References made from and Credit given to the following:

Dylan Tan – https://www.businessinsider.my/sales-and-services-tax-sst-malaysia/

Dr Choong Kwai Fatt – https://www.thestar.com.my/news/nation/2018/08/12/gst-vs-sst-which-is-better/

Rahimi Yunus – https://themalaysianreserve.com/2018/09/03/malaysia-returns-to-sst/