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Finance Ministry: New 8pc SST won’t cover water bills and 85pc of electricity users, set to generate RM3b in revenue

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Publish date: Wed, 28 Feb 2024, 07:35 PM

PUTRAJAYA, Feb 28 — The Ministry of Finance (MoF) has announced today the details of its tax reforms, which included an increase in sales and service tax (SST) from 6 per cent to 8 per cent effective March 1 this year and expected to generate an estimated additional RM3 billion in revenue.

In a statement, it said that the new rate only focuses on discretionary activities and business-to-business services, and will therefore shield the public from paying higher consumption tax for key essential services such as food and beverage, telecommunications, parking and logistics.

“To truly transform our economy, the government has taken a measured approach to reform our tax system. While it is important for the government to raise its revenue, there is a balancing act that we have to consider between improving the tax base and cushioning the rakyat from any undue burden,” Minister of Finance II, Senator Datuk Seri Amir Hamzah Azizan said.

“It is necessary for us to broaden the tax base to realign and strengthen our national fiscal foundation as we set the stage for a new era of economic growth under the Madani Economy framework. At the same time, we will continue to take on a ‘Whole of Government’ approach to right our economic trajectory, including being more prudent in our spending, reduce leakages and attract FDI," he added, referring to foreign direct investment.

It also announced that the service tax is only applicable for electricity usage above 600kWh, which will not affect almost 85 per cent of electricity users nationwide. Water supply services will also be exempt from the tax.

"The Government does not anticipate the changes to engender sharp price increases that would lead to an economic shock as the small two-percentage increase affects selected taxable services," said the statement.

The ministry said the coverage of the tax will be expanded to harmonise the increase in tax rate for selected services listed under the First Schedule of the Service Tax Regulations 2018, which was specified in the Service Tax (Amendment) Regulations 2024 gazetted on February 23 this year.

"For example, karaoke centres will be subject to 8 per cent Service Tax, similar to other entertainment as night clubs, dance halls, cabarets, and wellness centres," it said.

"Meanwhile, brokerage and underwriting services, which currently only apply to financial services, will be expanded to cover other brokerage industries such as ship/aircraft brokerage, commodities and real estate."

It also insisted that the change will not involve services that form a basic need and intrinsic part of Malaysians' lifestyle, with the rate for food and beverage, telecommunications and parking services remaining unchanged at 6 per cent.

Similarly, logistics services will be subject to a 6 per cent service tax, while no service tax will be imposed on food and beverage delivery services.

Earlier today, Treasury secretary-general Datuk Johan Mahmood Merican said several more sectors will see an increase in SST such as professional sector, the other service providers sector, and the entertainment sector.

“Karaoke centres, brokerage and underwriting services (excluding financial services), electricity, logistics services, and maintenance services, including corrective maintenance will now fall under the purview of the service tax.

“The service tax rate will vary based on the type of taxable service provided,” he said during a media briefing on SST.

According to him, services bundled together will be taxed according to their respective service groupings, with specific classifications outlined for accommodation, food and beverage, nightclubs, private clubs, golf clubs, telecommunications, and content applications.

He also said that traditional and complementary medicine services (TCM) will not be subjected to service tax legislation on March 1, and this will also apply retroactively for services provided between September 1, 2018, and February 29, 2023.

“Eligible TCM activities include traditional Malay, Chinese, Indian, and Islamic medicine, along with homoeopathy, chiropractic, and osteopathy,” he said.

Additionally, the service tax exemption extends to residential building repair, sinking funds, and maintenance charges imposed by developers, Joint Management Bodies or Management Corporations to homeowners.

Prior to March 1, nine services including accommodation (hotel, service apartments and guest house), food and beverage (restaurant, bar and coffee shop), nightclubs (dance halls, cabarets, wellness centres and massage parlours), private clubs (clubhouses based on membership, profession or class), golf clubs (golf courses or golf driving range) betting and gaming (lotteries), and professional services (legal services, engineering, accounting, coaching and information technology), credit card and charge card and other service providers (insurance, rentals, courier service and advertising) were subject to a 6 per cent service tax rate.

 

https://www.malaymail.com/news/malaysia/2024/02/28/finance-ministry-new-8pc-sst-wont-cover-water-bills-and-85pc-of-electricity-users-set-to-generate-rm3b-in-revenue/120480

Discussions
Be the first to like this. Showing 4 of 4 comments

DickyMe

Toll collectors at work.
Pirate mentality.

2024-02-28 20:44

icecool

everything so expensive now and still need to pay sst mati lah

2 months ago

Balian de Ibelin

Yeah, you must pay sst for the maintenance of simati coffin car.

2 months ago

DickyMe

Rob Peter and feed Ali.
Why socialism sucks!
https://www.youtube.com/watch?v=dbRH3VouO_4

2 months ago

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