Customs Department Says Essential Items Will Not Be Taxed SST
Certain Consumer Goods Will Not Subjected to the Upcoming SST
Vegetables. Poultry. Fresh milk. Various types of sugar.
These are just some of the consumer good items on a long list prepared by the Customs Department that is proposed to be exempted from Sales and Service Tax (SST).
The Sales and Service Tax will be reintroduced on 1 September 2018, but its 292-page long exemption list means household goods and other items – such as bicycles, orthopaedic appliances and carriages – are up for exemption.
The SST is a replacement for the former Goods and Services Tax (GST). Exempted goods will not have the 5 – 10% sales tax imposed.
6% Service Tax
In addition, the Customs Department has also prepared a list of proposed services which will be subjected to a 6% service tax under the new SST which includes hotels and homestay operators, Pay-Tv, insurance, telecommunication and Takaful service providers. This means that consumers will be charged an extra 6% of service tax on their insurance premiums and Astro (Pay-Tv) bills.
An RM25 tax per annum that is levied upon the issuance of every principal or supplementary credit or charge card is also another proposal which the government has come up with. The public will also need to be prepared to pay the service tax for professional services which include legal, architectural, accounting, surveying, engineering and valuation.
Hawkers, truck and restaurant operators can also be expect to potentially be hit with the SST. However, only businesses and individuals who earn more than RM500,000 annually will be subjected to the SST.
Datuk Seri Subormaniam Tholasy, the Director-General of the Customs Department, along with other officials explained that the department’s proposals still had to be assessed by the Cabinet. Datuk Subromaniam said this when speaking at a media conference opening the SST briefing session.
Once assessed, the Cabinet will submit the list of taxable services and exemptions for SST to the Parliament for tabling, and the SST will also take into account the bottom 40% of households (known as the B40).
Datuk Subromaniam stated that there was some widening experienced in the new SST if compared to the old one, but the difference is not much. He spoke about the revenue concern and the need to strike a balance, and emphasized that the SST coverage would be much narrower compared to that of the GST.
100,000 Businesses Will Be Affected By The New SST
In comparison, fewer than 100,000 businesses will be affected by the new SST, whereas the previous GST had implications for some 472,000 businesses. Therefore, Datuk Subromaniam said that by comparison, the SST is not expected to have the same kind of impact on consumers the way the GST did.
As to whether the prices of goods and services is expected to increase, Datuk Subromaniam said the SST was only a small component, and other factors which include fuel prices, trader and business attitude would also play a factor. He said the Department hopes businesses will not take advantage of the SST system by hiking up their prices.
Datuk Subromaniam also said that the Department was working with the Finance Ministry, and the Ministry of Domestic Trade and Consumer Affairs to help monitor the situation. In an announcement made by Datuk Subromaniam, the Customs Department will roll out a nationwide engagement session with stakeholders on the SST.
The SST was in place for decades until the previous Barisan Nasional government removed the SST and introduced the GST system instead back in 2015. With Pakatan Harapan as the new government, the promise was made that GST will be removed and the SST be reintroduced.
A full list of the proposed taxable services and exemptions can be viewed on the Customs Department website at http://www.customs.gov.my