Information is still sketchy on the list of goods and services affected by the reintroduction of the sales and service Tax (SST) on Sept 1.
However, a calculation based on items taxed under the previous SST would give a rough idea how the tax could affect the average consumer.
For example, would a family eating out with the bill coming to RM100 have to pay the 6% service tax under the SST?
According to tax expert Yong Poh Chye, they would, if the reintroduced tax follows the previous SST.
In the old SST, the family must pay the 6% service tax on their RM100 bill if the restaurant was located in a hotel with more than 25 rooms.
Restaurants in hotels with fewer than 25 rooms but with an annual turnover of more than RM300,000 also had to pay the tax.
In addition, the service tax was also imposed on restaurants not located in a hotel but which had an annual turnover of more than RM3mil.
“For the reintroduction of the SST, we do not know yet whether the government will follow the previous schedule or make adjustments,” said Yong, the CEO of Tax Advisory and Management Services Sdn Bhd.
In addition to the 6% service tax, the family would also have to continue to pay a service charge of up to 10% which is separate from the SST, if the restaurant imposes it (see main story ).
The SST has been in place for decades but the previous Barisan Nasional government scrapped it and introduced a Goods and Services Tax (GST) of 6% starting April 1, 2015.
The Pakatan Harapan government which had promised to scrap the GST in favour of reintroducing the SST, then zero-rated the GST from June 1.
On Monday, Finance Minister Lim Guan Eng announced that the provision of services will be taxed at 6% while the sale of goods will incur a 10% tax under the reintroduced SST.
Yong said that other service providers which were also subject to the service charge under the old SST included insurance companies and employment agencies.
Ernst & Young Tax Consultants Sdn Bhd tax director Jalbir Singh Riar said a 6% service tax would likely be applicable to both prepaid and postpaid mobile plans.He said this was based on the previous legislation of SST where telco services were subjected to the tax.On the sales tax under the old SST, Harvindar Singh of taxation consulting services firm Harvey & Associates said that it was imposed on goods manufactured in Malaysia and on imported goods.
“Some items were however exempted from the SST including certain food items and machinery,” said Harvindar.
He said that one problem with the old SST was that the tax was in some cases passed through the value chain in each layer, inflating the price which the end consumer pays.
PwC Taxation Services Sdn Bhd executive director Yap Lai Han said the question of whether prices will go up would depend on the types of goods.
“It remains to be seen if the 10% sales tax will be imposed on all types of goods, and whether there will be some form of relief on basic food stuff, similar to GST,” she said.
She added that information on the new SST was still scanty, and it was unclear at the moment if the Government would follow the old system or address the inherent weaknesses.
Council of Eminent Persons (CEP) member Tan Sri Zeti Akhtar Aziz said she would wait till she has all the details on the SST before commenting on the issue.
“We haven’t seen which goods (will be taxed). So, I won’t comment on it since I don’t know the details,” she said.
The Star
However, a calculation based on items taxed under the previous SST would give a rough idea how the tax could affect the average consumer.
For example, would a family eating out with the bill coming to RM100 have to pay the 6% service tax under the SST?
According to tax expert Yong Poh Chye, they would, if the reintroduced tax follows the previous SST.
In the old SST, the family must pay the 6% service tax on their RM100 bill if the restaurant was located in a hotel with more than 25 rooms.
Restaurants in hotels with fewer than 25 rooms but with an annual turnover of more than RM300,000 also had to pay the tax.
In addition, the service tax was also imposed on restaurants not located in a hotel but which had an annual turnover of more than RM3mil.
“For the reintroduction of the SST, we do not know yet whether the government will follow the previous schedule or make adjustments,” said Yong, the CEO of Tax Advisory and Management Services Sdn Bhd.
In addition to the 6% service tax, the family would also have to continue to pay a service charge of up to 10% which is separate from the SST, if the restaurant imposes it (see main story ).
The SST has been in place for decades but the previous Barisan Nasional government scrapped it and introduced a Goods and Services Tax (GST) of 6% starting April 1, 2015.
The Pakatan Harapan government which had promised to scrap the GST in favour of reintroducing the SST, then zero-rated the GST from June 1.
On Monday, Finance Minister Lim Guan Eng announced that the provision of services will be taxed at 6% while the sale of goods will incur a 10% tax under the reintroduced SST.
Yong said that other service providers which were also subject to the service charge under the old SST included insurance companies and employment agencies.
Ernst & Young Tax Consultants Sdn Bhd tax director Jalbir Singh Riar said a 6% service tax would likely be applicable to both prepaid and postpaid mobile plans.He said this was based on the previous legislation of SST where telco services were subjected to the tax.On the sales tax under the old SST, Harvindar Singh of taxation consulting services firm Harvey & Associates said that it was imposed on goods manufactured in Malaysia and on imported goods.
“Some items were however exempted from the SST including certain food items and machinery,” said Harvindar.
He said that one problem with the old SST was that the tax was in some cases passed through the value chain in each layer, inflating the price which the end consumer pays.
PwC Taxation Services Sdn Bhd executive director Yap Lai Han said the question of whether prices will go up would depend on the types of goods.
“It remains to be seen if the 10% sales tax will be imposed on all types of goods, and whether there will be some form of relief on basic food stuff, similar to GST,” she said.
She added that information on the new SST was still scanty, and it was unclear at the moment if the Government would follow the old system or address the inherent weaknesses.
Council of Eminent Persons (CEP) member Tan Sri Zeti Akhtar Aziz said she would wait till she has all the details on the SST before commenting on the issue.
“We haven’t seen which goods (will be taxed). So, I won’t comment on it since I don’t know the details,” she said.
The Star
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