Malaysia’s taxman is back knocking for a share in sales and services

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Malaysia will re-impose a tax of between five per cent and ten per cent on the sale of goods, while services will attract a six per cent levy when a new tax regime comes into effect on September 1.

The so-called Sales and Services Tax (SST) is being reintroduced after the government led by Prime Minister Mahathir Mohamad repealed an unpopular goods and services tax (GST) earlier this year after his surprise election win.

There are some exemptions, though. For example, restaurant with less than 1.5 million ringgit ($370,000) in annual revenue won’t be taxed SST. Furthermore, total of 5,443 consumer items are exempted from the tax, including daily food items, poultry, meat and fish, sanitary pads, newspapers, motorcycles up to 250cc and bicycles, private hospitals and domestic flights.

Still to be taxed are electrical appliances like washing machines and radios, personal items like shampoo and shower gel, as well as processed foods like fruit juice and butter.

According to the government, 85 per cent of businesses in Malaysia will be exempt from the tax and small businesses will not be affected by it at all. The amount of goods free from SST is ten times higher than goods that were exempted from GST.

On the downside, SST will be imposed on the three currently tax-free islands in Malaysia, namely Labuan, Langkawi and Tioman. Under the new Sales Tax Act 2018, Finance Minister Lim Guan Eng said sales tax will be charged on the importation of wine, spirit, beer, malt liquor, tobacco and tobacco products into those “designated areas”.

Under this same order, sales tax will also be imposed on the importation of marble and anchovy into Langkawi, as well as the import of motor vehicles into Tioman. Tax will also be collected on the importation of petroleum into Labuan, Langkawi and Tioman.

Service tax on the islands will in the future also be charged on the provision of accommodation places by operators of hotels, inns, service apartment, homestays, lodging house or any similar places, as well as on food and beverage services provided by caterers, food courts and restaurants, bars, snack bars, canteen, coffee houses and similar places, unless for canteens in educational institutions or operated by religious bodies.

Other services that will be taxable are the provision of passenger air transport services or telecommunication services between duty free islands.

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Reading Time: 2 minutes

Malaysia will re-impose a tax of between five per cent and ten per cent on the sale of goods, while services will attract a six per cent levy when a new tax regime comes into effect on September 1.

Reading Time: 2 minutes

Malaysia will re-impose a tax of between five per cent and ten per cent on the sale of goods, while services will attract a six per cent levy when a new tax regime comes into effect on September 1.

The so-called Sales and Services Tax (SST) is being reintroduced after the government led by Prime Minister Mahathir Mohamad repealed an unpopular goods and services tax (GST) earlier this year after his surprise election win.

There are some exemptions, though. For example, restaurant with less than 1.5 million ringgit ($370,000) in annual revenue won’t be taxed SST. Furthermore, total of 5,443 consumer items are exempted from the tax, including daily food items, poultry, meat and fish, sanitary pads, newspapers, motorcycles up to 250cc and bicycles, private hospitals and domestic flights.

Still to be taxed are electrical appliances like washing machines and radios, personal items like shampoo and shower gel, as well as processed foods like fruit juice and butter.

According to the government, 85 per cent of businesses in Malaysia will be exempt from the tax and small businesses will not be affected by it at all. The amount of goods free from SST is ten times higher than goods that were exempted from GST.

On the downside, SST will be imposed on the three currently tax-free islands in Malaysia, namely Labuan, Langkawi and Tioman. Under the new Sales Tax Act 2018, Finance Minister Lim Guan Eng said sales tax will be charged on the importation of wine, spirit, beer, malt liquor, tobacco and tobacco products into those “designated areas”.

Under this same order, sales tax will also be imposed on the importation of marble and anchovy into Langkawi, as well as the import of motor vehicles into Tioman. Tax will also be collected on the importation of petroleum into Labuan, Langkawi and Tioman.

Service tax on the islands will in the future also be charged on the provision of accommodation places by operators of hotels, inns, service apartment, homestays, lodging house or any similar places, as well as on food and beverage services provided by caterers, food courts and restaurants, bars, snack bars, canteen, coffee houses and similar places, unless for canteens in educational institutions or operated by religious bodies.

Other services that will be taxable are the provision of passenger air transport services or telecommunication services between duty free islands.

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