Starting September 1

Starting September 1, 2018, Sales and Service Tax (SST) administered by the Royal Malaysian Customs Department (RMCD) will be enforced in Malaysia. Taxes SST is a one-tier tax where this tax is only applicable to certain manufacturers and producers and can not be claimed. This tax is considered as a cost to the business. Sales tax and service tax are two different taxes. First, the sales tax is known as a single stage tax where this tax is only charged once by a manufacturer cost or import cost of 5% – 10% rate depending on the item. Secondly, service tax imposed by 6% on certain services when offered to consumers.
Unknowingly, almost half of the 11,197 items listed under GST have been converted into a list of SST of 6,405 items imposed. Consumer products at 793 can be taxed at 5%, while 5,612 other items are 10% and services chargeable at 6% under SST 2.0. The government expects SST to be more tax-appropriate for the middle-income economy and better serve the people economically. The re-introduction of SST has also triggered doubt and misunderstanding among consumers that they feel the burden of paying 16% on purchased items. This is a misunderstanding because the SST mechanism does not work in that sense. In fact, SST will increase the purchasing power of Malaysians, since SST is a single-tier tax and imposes a lower burden on daily spending. In short, we can only expect to see some differences and adjustments in product prices depending on the type of service or well paid.

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