KUALA LUMPUR: Malaysians can look forward to eating out more and enjoying a better quality of life with more than 5,000 items exempted under the Sales and Service Tax.
The passing of Service Tax Bill yesterday and the Sales Tax Bill on Tuesday in the Dewan Rakyat saw the Pakatan Harapan government crossing the first hurdle in fulfilling its election pledge – to do away with the Goods and Services Tax.
However, the Bills still need to get the nod from Senators in Dewan Negara. And, this is controlled by Barisan Nasional representatives.
The Dewan Rakyat also passed the Goods and Services (Repeal) Bill 2018 tabled by Finance Minister Lim Guan Eng yesterday.
With the SST, some 7,000 restaurants and food outlets that rake in less than RM1mil annually will be exempted from the tax.
“The government understands that Malaysians love their roti canai, fried rice, kuay teow, iced Milo and others which are enjoyed by families and while with friends outside their homes,” said Lim.
“Hence, restaurants nationwide are given flexibility and will only be imposed service tax if their annual sales exceeds RM1mil,” the Finance Minister said when tabling the Service Tax Bill for the second reading in Parliament.
He said the move would help ease the burden on diners while increasing their purchasing power.
Lim said food truck operators who earned less than RM1mil annually would also be exempted from paying SST. He said some 13,000 restaurants, mamak and food outlets had to pay the GST before the tax holiday began.
He also said accommodation and food provided by private hospitals would be exempted from the SST. These attracted GST previously.
“On prepaid cards, the tax will be the same. If they top up RM10, they will pay only RM10. It is the same, so there is no issue," he said in response to claims by Datuk Ahmad Maslan (BN-Pontian), who said that prepaid users would have to pay more under SST come Sept 1.
In order to spare small businesses and traders the burden of tax compliance cost, he said the SST threshold would be fixed at RM500,00 for all services.
“However, no threshold is fixed for the issuance of credit and charge cards, including supply of electricity to domestic users,” he said.
Earlier, Lim told lawmakers that only 38% of goods would be taxed under the SST compared to 60% under the GST.
He said unlike the GST, which was a layered cradle-to-grave tax, the SST took into account the needs of the rakyat. For example, Lim said milk bottles, child care services, bicycles, motorcycles below 250 CC, health insurance, adult diapers, wheelchairs and walking sticks were exempted.
“According to the Customs Department, some 5,443 goods and services are exempted from the SST compared to only 545 items under GST.
“In other words, the amount of goods and services that will not be taxed under the SST is tenfold the number of items that were exempted under the GST,” he pointed out.
On the Service Tax, Lim said that only 43.5% of services would be imposed the 6% tax under the SST, which was lower than the 64.8% taxed under the GST.
Lim said that services that would be imposed the 6% service tax under SST for the first time included gambling activities such as forecast numbers, lotteries, casinos, clubs, and turf clubs.
Lim said the definition for hotel accommodation will be expanded to include bed and breakfast, shared accommodations, serviced apartments and homestay, and these would be imposed the 6% tax.
He said business-to-business (B2B), insurance and takaful services, would be expanded to include general insurance for individuals.
However, he said this did not cover medical insurance.
Under the SST, all forms of night clubs, private clubs, golf clubs and golfing ranges will be taxed.
Also taxable are telecommunication services with add-on services such as applications, games included in phone online packages, internet services and paid television services.