Sales and service tax of Malaysia

The Ministry of Finance (MOF) as established Sales and Service Tax (SST) in Malaysia during 1^st September 2018. It is a new initiative taken by the government of Malaysia where certain manufacturing industries will be charged service tax at this regime. There are some manufacturing and services sectors which will and will not also be charged depending on the industrial sector. This as been inspected by the Royal Malaysian Custom Department (RMCD) where the scarp rate or to be called tax rate is announced as 10% of GST and 6% of SST for businesses and customers. The Malaysian service tax is an indirect tax service done for the initiative of tax proposed to the people who manufacture the good and services under the provision. The SST was called as consumption tax where it is a single stage of consumption tax. This policy is exempted for Labuan Island, Langkawi Island and Tioman Island.

SST in Malaysia

In the country, SST is established for manufacturers and consumers who used the products of specific industrial sectors where the goods are under service tax custody. A person is licensed “taxable services” when they distribute the goods to the consumers. This is stated under the service tax act of Malaysia. Some of the service tax to be paid are; accounting, IT services, banking, electricity, hotel, telecommunication, courier, security, parking, consultancy, valuer, etc. these are some of the services where SST under 6% is to be paid by the consumers and manufacturers. Whereas, service tax which are not necessary to be paid is known as “imported services” where it there are list of manufacturing products which are embedded by the consumers and manufacturers to pay tax for it. The manufacturing products which are exempted to be paid are; jewelry, tailoring and goods installing in the building.

The service tax policy is a single category tax. As per service act 2018 the imported goods which are licensed registered goods are to be paid for manufacturing and consuming the goods. The licensed goods are mandatorily and voluntarily registered. According to the Malaysian sales act, the manufacturers and sub-contractor are supposed to pay RM 500,000.00. SST is a tax which does not charge import and export services. The tax remuneration is implemented in two stages. One is imported Malaysian business which will be implemented from 1^st January 2019 and the second is when the services is imported for Malaysian customers, which will be implemented from 1^st January 2020.

The companies will receive service tax payment receipt after twelve months or the next day of the following term. The businesses in Malaysia should be recorded for every seven years, it can be recorded in softcopy and hardcopy or either way. Th bad debts can be claimed by the affected party within six months for every six years, depending on the tax to be paid. SST is a new service tax system which is approached by Malaysia to charge the manufacturers who distribute the specified licensed goods whereas and consumers who use goods under the specified licensed goods which are pressed on charge by the MOF of Malaysia. The government is trying to restart the service tax functions in the country, where there will be changes and replacement with the current tax system.

Questionnaire:

What is SST?

SST is a Sales and Service Tax policy where it is charged for specific goods under the sales act.

When was SST introduced in Malaysia?

It was introduced in 1^st September 2018 which was initiated by the Malaysian Ministry of finance (MOF).

What is consumption tax?

It is an indirect tax rate of goods and services.

Which sectors are not charged for SST?

Import and export sectors are not charged for SST

What is the percentage charged for SST?

6% Tax rate is charged for SST