Service Sector Remain 6% from GST into SST in Malaysia
However, room tariffs may not increase after the new policy is deployed from September 1, 2018.
As far as the service sector is concerned, the deployment of SST (Sales and Services Tax) starting from September 1, 2018, may not result in much of a price difference for services.
We feels that this will be because the 6 percent tax levied on services like those offered by food catering companies, insurance, and hotels will be the same like that charged by the GST (Goods and Services Tax) prior to this. In fact, prices are expected to remain the same as before for most services.
Although the Malaysian public is waiting to find out the impact of SST on the cost of other goods, the price of most services may not exhibit much of a difference.
A sales tax of 10 percent is charged on some products such as canned drinks, which are at a production stage. There is a chance of restaurants increasing their prices for covering the service tax.
The SST will be also imposed on the services provided by the following:
- Private clubs
- Nightclubs
- Electrical services
- Credit cards
- Information technology services
- Domestic services
- Advertising
- Car rentals
- Parking
- Security
- Valuers
- Engineers
- Architects
- Forwarding Agents
- Accounting services
- Legal services
- Paid television
- Telecommunications
- Lotteries
- Casinos
- Golf clubs
Room tariffs may not go up
Most hoteliers in Malaysia do not anticipate that the implementation of SST will increase their room tariffs apart from the usual spike that typically happens during peak periods like school vacations because of the high demand.
Rather if the tax mechanism is similar to the earlier SST in the country, there is a possibility of the room rates going down.
A 6 percent tax was charged on service charges under the GST. It led to a rise in room rates and other hotel services.
At the same time, the implementation mechanism for the new SST in the service sector is explained properly to the hotels fast so that they are not confused.
