To this date, there are approximately 5,443 items that’s being exempted from the Sales and Services Tax (SST), while a total of 5,612 items are subjected to 10% sales tax and more than 600 items will be imposed with a sales tax of 5%. There’s been couple of confusion regarding SST among consumers, right even before the new tax regime was implemented last month. Consumers find that the tax transition is hard to deal with without a complete list of chargeable items. But with more items expected to be exempted by the year end, government aims to gradually ease the confusion especially when it comes to real estate sector. Imagine you are aspiring to buy a rumah selangorku in your comfortable salary and with the SST that kicks in, the prices of the property will somewhat increase that posed to be hefty amount for buyer like you to pay.
It was recently pointed out by the Economist Carmelo Ferlito that the SST’s current structure is cluttered with too long list of exempted goods and services. Apart from that, senior fellow institute for Democracy and Economic Affairs told FMT news that businesses could exploit the complexity to raise prices to unreasonable levels and to make false declarations on their collections. There’s also concerns and complaints that we are seeing a lot of feedback and suggestions regarding SST in the past month, mainly from Malaysian consumers, experts and also businesses. Here are the highlights that you should know:
1. Mobile prepaid plan
For these users, you might have noticed that the usual RM10 reload had only amounted to RM9.43 due to the SST earlier in September. Dissatisfied consumers took their deduction complains to social media. It is found that consumers got slightly less credit for all reloads or top-ups. The RM0.57 deduction is inclusive of both credit and 6% SST. Thus, four days after the SST was implemented, our Finance Minister Lim Guan Eng had announce that Malaysians will no longer needed to pay SST for mobile prepaid services provided by their telco service providers. Prepaid consumers will then receive maximum credit value as they reload and they will no longer be charged with SST through the exemption.
2. High end lifestyle products
Shopping for non-food items was mainly burdensome on our wallet, as most lifestyle-related products is attached to 6% tax during the previous tax regime. Not until late October, plentiful of lifestyle products were subjected to 10% sales tax that led to many complaints about lifestyle products being too expensive. However, on September 26, it was announced that the government will lower the sales tax rate from 10% to 5% for cosmetic products, beauty and skincare products, mobile phone accessories, watches, retreaded tyres, new tyres and inner tubes for motorcycles.
3. Properties for aspiring property buyers
It is known that the property prices in Malaysia is getting out of reach for many Malaysians. As aspiring property owners felt relieved to discover that properties (including lands) will not be taxed where the cost of purchasing a property may not change due to the other services involved in the construction and in the property transaction that is not SST exempted. For example, property buyers should be expecting that a greater tax burden for the use of professional services rendered by solicitors, architects, and engineers under SST.
In late September, our finance minister gave a stern warning to property developers to reduce house prices on national level. To our great dismay, only developers from Penang given their consent and agreement to agreed in price reduction, between 6% to 10%. Plus, if this is not happening, Lim Guan Eng said that the government may have to rethink the exemption given and find new ways to make houses affordable, especially for first-time buyers.
1. Cigarette pricing seems confusing
Our government has made it clear that no price reductions for sin stocks especially tobacco products and alcohol. Price war begun the moment SST is implemented, causing confusion among consumers when it comes to new cigarette pricing. However, till now tobacco consumers are still confused by the cigarette pricing as our Ministry of Health (MOH) has failed to introduce minimum level of increase in retailing prices. Besides, with the absence of price guidance from ministry has only contributed to an ongoing price war.
2. The struggle of dining out
When SST is in reign, foodies are worried to dine out because all food prices are subjected to SST which they have expressed their concern over the matter. However, it is reported that there are only 4,732 restaurants are subjected to SST. Thus, restaurants or shops that were previously subjected to GST, will not impose SST on their customers. Based on the report, finance minister said that only restaurants with annual threshold exceeding RM1.5million would impose SST of 6% to their customers.
Fret not with the SST as there are more than 600 complaints on SST were made since 1st September, mostly due to unreasonable price hikes or confusion on prices. Consumers have rights to express their dissatisfaction or issues to the Ministry of Domestic Trade and Consumer Affairs (KPDNKK) through WhatsApp with this number, 019-2794317, your report should include your full name, a copy of the receipt and the name of the business that you wish to report. You can also lodge your report through the eAduan portal.
