In Malaysia, the GST (consumption tax), which was implemented in April 2015, has been effectively abolished by the new government, and the SST (Sales and Service Tax) has been reinstated.
The Sales & Service Tax is the Indirect Tax imposed by the Customs Service on specific products or services, comprising a sales tax of between 5% and 10% on goods, and 6% on services.
Sales Tax is charged on taxable goods manufactured by an individual or company with an annual turnover exceeding RM500,000, as well as on taxable goods imported into Malaysia. Manufactured goods exported would not be subject to sales tax. SST a single-stage tax, only imposed at one stage in the supply chain, which is the import or manufacturers’ level, and only certain industries are required to pay SST. Manufacturers of taxable goods would generally be entitled to an exemption on sales tax paid on their raw materials, components and packaging materials.
Service Tax is imposed on specific prescribed services provided by a taxable person carrying on a business in Malaysia. Service tax is also a single-stage tax charged once by the service provider. Services subject to service tax include hotels, restaurants, telecommunication, gaming, professional and consultancy services, motor vehicle repair, credit cards, domestic flights, IT services and electricity.
Important “to-know” Facts about SST
1. The number of goods exempted from SST is ten times more than GST, which translates to a total of 5,443 items currently.
2. Some daily essentials are exempted from tax:
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. On the transportation front, vehicles including bicycles, motorcycles below 250cc and forklifts; and petrol and diesel will not be taxed. Items made in or imported into duty-free islands of Langkawi, Labuan and Tioman are also exempted.
3. 5 or 10 percent sales tax are still imposed on these items:
5 per cent 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. 10 per cent sales tax include shellfish, canned drinks, household electrical appliances, toilet paper, tissue, and cosmetics. Cars and motorcycles exceeding 200cc will also be similarly taxed.
4. Service Tax:
Services provided by hotels, insurance companies, telcos and professionals like lawyers and accountants are subject to a 6 per cent service tax. However, it’s payable only if these businesses have an annual revenue that is more than 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. (Source: Business Insider Singapore)
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