SST Advisory & Planning (New)
The Ministry of Finance (MoF) announced that Sales and Service Tax (SST) which administered by the Royal Malaysian Customs Department (RMCD) will come into effect in Malaysia on 1 September 2018. The move of scrapping the 6% GST has paved the way for the re-introduction of SST 2.0, which will come into effect in 1 September 2018.
Our SST Advisory services include:
- Determine your taxable activities in your business process.
- Determine impact of SST on your product pricing and cash flow planning.
- Periodic review and filing of SST return.
- Apply for SST Exemptions/ Benefits.
- Advice on correct invoicing format, D/N and C/N requirements.
- Claiming for Bad debts reliefs and recovery.
- Migration from GST to SST during transitional period.
- Advice on pre and post SST implementation.
1. Difference between SST and GST
Sales and Services Tax (SST)
The Sales Tax is only imposed on the manufacturer level whereas the Service Tax is imposed on consumers that are using tax services. SST rates are less transparent than the GST which had a standard 6% rate, the SST rates vary from 6 or 10%.
Goods and Services Tax (GST)
GST covers everyone, retailers, and trades. The sales tax only covers manufacturers while services tax covers certain prescribed services like professional services. The suppliers could claim back the GST from the government, however, the government does not instantly refund the GST claims, causing issues for the companies operating cash flow.
“GST as you know covers everyone, retailers and traders. On the other hand, sales tax only covers manufacturers while services tax covers certain prescribed services such as professional services, so there must be a thought process on the transition to SST.”
– PricewaterhouseCoopers Taxation Services Malaysia (PwC) executive director and head of indirect tax Raja Kumaran
The infographic shows a quick overview of the differences between the GST and SST:
2. Sales Tax 2018
The Sales Tax, a single stage tax, was levied at the import or manufacturing levels. In Malaysia, it is a mandatory requirement that all manufacturers of taxable goods are licensed under the Sales Tax Act 2018. Government collects Sales Tax at the manufacturer’s level only and the element of sales tax embedded in the price paid by the consumer. Companies (Manufacturer or Sub-contractor) with a sales value of taxable goods exceeded RM500,000 for 12 months period are liable to be registered under the Sales Tax Act 2018. Goods which are not exempted through will be charged sales tax at various rates (5% to 10%) prescribed under Guide on Sales Tax Rates For Various Goods.
3. Service Tax 2018
Malaysia’s Service Tax is a form of indirect tax imposed on any provision of taxable services made in the course or furtherance of any business by a taxable person in Malaysia. Service tax is not chargeable on imported services and exported services. In general, the services provider is liable to be registered under the Service Tax Act 2018 when the value of taxable services provided for a period of 12 months that exceeds a threshold of RM500,000. The SST registration threshold is RM1,500,000 for Operator of restaurant, bar, snack-bar, canteen, coffee house or any place which provides food and drinks (eat-in or take-away , exclude canteen in an educational institution or operated by a religious institution or body), Caterer and Food court operator. Please refer to the Service Tax Guide for more information.
The Service Tax rate is fixed at 6%.
The following taxable services are subject to the service tax:
- Hotel (include lodging house, service apartment, homestay, Inn, rest house, boarding house).
- Insurance and Takaful.
- Service of food and beverage preparation (include restaurant, cafe, catering, take-away, food truck, retail outlet, hawkers and etc).
- Club (include Night club, private club, golf club).
- Gaming (include Casino, game of chance, sweepstakes, gaming machines, lottery, betting).
- Telecommunication.
- Pay-TV.
- Forwarding agents.
- Legal.
- Accounting.
- Surveying.
- Architectural.
- Valuer.
- Engineering.
- Employment agency.
- Security.
- Management services.
- Parking.
- Motor vehicle service or repair.
- Courier.
- Hire and drive car.
- Advertising.
- Domestic flight except Rural Air Services.
- Credit or charge card.
- IT services.
- Electricity.
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