DEWAN RAKYAT PASSES SERVICE TAX 2018 BILL
At 6pc, it will be expanded to cover all gambling activities, says Lim
THE Dewan Rakyat yesterday passed the Service Tax 2018 Bill after it was read for the third time by Finance Minister Lim Guan Eng.
Speaker Datuk Mohamad Ariff Md Yusof announced the passing of the bill, which replaces the Goods and Services Tax (GST) Act, without any amendment.
On Tuesday the Dewan Rakyat approved the Sales Tax 2018 Bill to replace GST.
During the bill’s second reading, Lim said the service tax rate would be set at six per cent and would take effect from Sept 1.
He said the tax would be expanded to cover gambling activities, hotel and food services.
All gambling activities including number forecasts, casinos, clubs, lottery and horse-racing will be taxed.
Other services that will be taxed include flight services, flight charters, including that of domestic helicopter services, with the exception in Sabah and Sarawak.
In addition, the service tax will also be imposed on information technology services and domestic electricity supply that exceeds 600 units a month.
Lim said the implementation of the tax would follow the scope and model of the Service Tax Act 1975, which was abolished when GST was implemented in 2015.
“Specifically, only 43.5 per cent of services will be taxed, compared with 64.8 per cent of services under GST.”
He said several amendments needed to be done to the 1975 scope and model to ease taxrelated administration, reduce business costs and minimise weaknesses in the tax system.
“It (service tax) also aims to boost the people’s wellbeing by alleviating their cost of living.”
Lim said several services would undergo enhancement and streamlining.
These, he said, included the hotel industry, which would see the service tax’s scope expanded to include bread and breakfast (B & B), shared facilities, serviced apartments and homestays.
“It is also expanded to cover restaurant services, including catering, takeaway meals and food trucks, as well as food and beverage preparations at retail outlets.
“Insurance and takaful services (business to business) are expanded to cover general insurance coverage offered to individuals (business to consumers), but it will not include medical insurance.
“Tax will be imposed on vehicle rental services covering all types of vehicles, including those registered under the Tourism Vehicles Licensing Act 1999.
“Also included are all types of services at night clubs, private clubs and golf clubs.”
Lim said food outlets, such as those selling roti canai, nasi lemak and nasi goreng, with an annual revenue of less than RM1 million would be exempted.
He said the service tax would be imposed on services and businesses with an annual revenue above RM500,000.
“As such, restaurants need not charge service tax if their revenues are less than RM1 million a year.”
Lim said credit cards, charge cards and supplementary cards would be charged RM25 service charge annually.
During the debate on the bill, an opposition backbencher yesterday defined the Sales and Service Tax, or its acronym of SST as ‘‘senyap-senyap tambah”.
Datuk Ahmad Maslan (BNPontian) came up with the phrase during the debate.
“Outside (Dewan Rakyat) there, the youngsters are saying ‘slow-slow tipu’,” he said followed by laughter from other members of the august house.
Citing an example of the six per cent sales tax’s impact, Ahmad said it would see restaurants and fast food joints increasing their profits, as they already had a 10 per cent sales tax in place.
“The effect is that consumers will be burdened with an overall tax of 16 per cent for each and every product and service.”
He proposed a 30 per cent service tax be imposed on casinos, lottery premises, gambling machines and other gambling related products and services.
“Why only six per cent? You should impose more than that.
“In fact, it would be better off if you shut them down.”
He said the people should be prepared as he expected prices for prepaid top-ups to increase following the tax’s implementation.
“I hope the people will assist us by utilising social media to ‘whack’ PH (Pakatan Harapan) as prepaid cards will be more expensive.”