First tax holiday for Malaysian consumers in 40 years begins tomorrow

31 May 2018 / 23:28 H.

    PETALING JAYA: For the first time in four decades, Malaysians will be taking a breather from taxes levied upon products and services for a period of three months starting tomorrow, as zero-rated Goods and Services Tax (GST) comes into effect and the Sales and Services Tax (SST) is only to be implemented from Sept 1.
    "For the first time after 40 over years, Malaysia's public consumer is not paying any taxes on goods and services in respect of no sales tax, no services tax and no GST. All these taxes will not be charged, so we call this three months, a tax holiday," K-Konsult Taxation Sdn Bhd managing partner Koong Lin Loong told SunBiz.
    On what this tax holiday could mean for consumers, Koong explained that while they may be expecting at least a 6% decrease in prices across the board because of the zero-rating of GST, it may not be the case for items sold in supermarkets for example, which currently do not state the breakdown for GST. He said for these items, prices may not go down as much, at most by 5.66%.
    Koong did however opine that the "feel good" factor brought about by the zero-rating of GST could lead to increased demand for goods and services by consumers.
    Thenesh Kannaa, Partner at Thenesh, Renga & Associates (Tratax) noted though that for businesses, the three months will be more of a breather before it goes back to the SST regime, where manufacturers and importers will be the tax bearers.
    He said businesses should bear in mind that GST has been zero-rated but not abolished, thus they still have to ensure that records are maintained and are in adherence with the GST Act 2014, which is yet to be repealed in a parliamentary sitting. This includes the submission of GST returns as per routine until further notice, and the prescription of tax invoices with the correct GST rate and date of purchase.
    While the three-month window may not have an immediate impact on production cost since GST is borne by end users, going by the previous SST yardstick, there is likely to be an increase in production cost once SST is enforced.
    As the government is still firming up details on the new SST and a rate is yet to be announced, Koong opines that both sales and services tax would be standardised at 6% to avoid a spike in inflation.
    The previous SST stipulated a sales tax of 10% on local manufacturers and importers, while the services tax stood at 6%.

    thesundaily_my Sentifi Top 10 talked about stocks