The 14th General Election euphoria is coming to an end now as the Goods and Services Tax (GST) tax-holiday will be over by this Saturday (Sept 1), replaced with the new tax system − Sales and Service Tax (SST).
According to NST, Yang di-Pertuan Agong Sultan Muhammad V approved the new tax on August 24 after being passed in Dewan Rakyat August 9. Finance Minister admitted that SST was hastily implemented as the government was in dire need of money to run the country or else they would face an operating expenditure deficit up to RM4 billion. If it didn’t commence by September, the government would fail to pay civil servants salaries and maintenance of offices, Malay Mail reported.
Lim understood that the public have a lot of questions about the SST formula but as of now, the ministry will hold discussions with businesses and all other relevant parties nationwide to get their feedback and improvise along the way.
To give you a heads-up, we have gathered 10 facts about SST, what we know so far:
1. SST will only affect 70,000 businesses as opposed to 420,000 during GST
Finance Minister said that out of 472,000 business that were registered with GST, only about 80,000 registered with SST. NST reported that the number of businesses that would be affected by the new tax is six times lower than GST.
2. Sales tax is either 5% or 10%; Services 6%
According to Malay Mail today’s report (Aug 30), Lim said 793 goods fall under the 5% tax bracket whereas 5,612 items in the 10%.
As for service-based businesses, 25 categories will have to pay the new levy. That’s 43.49% of all service tax-applicable businesses; under GST, it was much higher at 65.85%.
3. About 85% of businesses will be exempted from SST
The Finance Minister said small businesses wouldn’t be burdened by the new tax as the government doesn’t wish the amount to pass down to the end-customers.
4. Eateries that make over RM1.5 million will have to pay SST
Foods and beverages outlets that make more than RM1.5 million in annual sales will only be imposed by SST.
Lim said, ” We decided on that because we don’t want food prices to increase. The people must be our eyes and ears to ensure prices are in check.”
The Finance Minister believed the eateries would adhere to what they had promised before which is to not raise their food price at their premises.
Under GST, the taxable annual sales threshold was at RM500,000, it’s a RM1 million increase with the new SST.
5. Here is a list of items exempted from SST
The Star reported that the goods exempted under new levy is 10 times more than GST. Previously, only 545 items were exempted but under SST, a total of 5,445 goods would be tax-free.
Customs Department deputy director-general Datuk Seri Subromaniam Tholasy revealed the list to media today:
- Poultry (chicken, fish & meat)
- Daily food items (like rice, cooking oil and bread)
- General goods (newspapers)
- Vehicles (bicycles, motorcycles below 250cc & forklifts)
- Private hospitals
- Veterinary services
- Domestic flights (with an exception for rural air services)