SST Malaysia to Impose 5-10% Tax on Goods and 6% on Services
Saturday, September 1 will be a landmark day for Malaysia as a new tax policy comes into effect. Under the latest tax policy SST Malaysia, a tax will be imposed on the range of 5-10 percent on the sale of goods. Plus, a tax of 6 percent will be levied on the services. The information was shared by Subromaniam Tholasy, the customs chief of the country.
The Malaysian Government is reintroducing the SST (Sales and Services Tax) after Mahathir Mohamad, the Prime Minister of the country revoked the unpopular GST (Goods and Services Tax) at the beginning of the month of August.
However, the scope of GST was much wider as compared to that of the SST Malaysia. GST was launched on April 1, 2015, and had a tax rate of 6 percent. Although the tax rate charged on goods as part of SST seems to be higher as compared to GST, around 5,443 items have been exempted under the new tax regime. The old system (GST) had exemptions on only 544 items in comparison.
In total, the Sales and Service Tax will be levied for 38% of the CPI (Consumer Price Index) basket of goods as compared to a whopping 60 percent when GST was in effect.
Some key food items that will not be taxable under the SST regime include bottled drinking water, baby food products, bread, cooking oil, and rice. General goods like wheelchairs, construction materials like bricks, cement, and sand, as well as medicine and wheelchairs are also exempted from SST Malaysia. Eateries in Malaysia will only come within the scope of the SST when their annual turnover is more than 1.5 million RM.
Lim Guan Eng, the Finance Minister of the country said that it is because of the massive spike in exemptions under SST, that the government is expected to raise around RM21 billion in 2019 in comparison to RM44 billion raised last year by GST. Lim added that it also signifies that the government will return about RM23 billion to the citizens of Malaysia. The minister also added that the latest tax regime may not result in higher prices though there is a likelihood of some inflation. Lim feels that in case there is a price increase, it could be because of profiteering by businesses.
Government warns traders not to raise goods prices
Meanwhile, Malaysian traders have been alerted not to take undue advantage of the sales and service tax by increasing the prices of the goods on September 1. Mohd Roslan Mahayuddin, the Division director of the enforcement division of the Ministry of Domestic Trade and Consumer Affairs shared that traders should not charge high prices under the new tax regime as SST is imposed only on the manufacturing sector.
Though it takes time for the goods to reach the stores from the factory, traders need to utilize their existing stocks when the tax holiday was declared by the government prior to this.
Thus, there is no necessity for the Malaysian traders to increase the prices after the initial days of the SST deployment, according to the minister.
He further said that his ministry will be monitoring and checking the traders. They will also not hesitate to take stern actions against any trader who commits offenses.
Meanwhile, Guardian Malaysia on its part has declared to ensure that prices of goods are not changed across all the stores for the entire month of September.
Consumers may have a big role
We feels that there will be no change in prices because SST Malaysia is a one-stage tax. Plus, it will be levied solely on the manufacturers of Malaysia.
GST, on the other hand, was levied on a number of goods and services in the country. It was a multi-stage tax in Malaysia and all stakeholders in the logistics and supply chain channels including the customers had to pay for it.
If consumers feel that the prices they have to pay are unjustified after the deployment of Sales and Service Tax, they should bring it to the notice of the relevant authorities.
The government of the country needs to spread a word of mouth about the essential phone numbers and channels so that the general public of the country can report irregularities if any.