‘INDUSTRY MAY LOSE COMPETITIVE EDGE
SST to become exponential tax system as each invoice by media owners, advertising agencies will be charged 6pc, warns source
THE local marketing communications industry risks losing its competitive edge due to possible double taxation following the implementation of the Sales and Services Tax (SST).
An industry source said based on recent meetings with the Customs Department on guidelines for the new tax regime, SST would become an exponential tax system for the industry as it would charge each invoice issued.
Compounding the matter is the fact that the industry does not have any input tax exemption.
The source, citing an example, said when a media owner charged the six per cent SST in an invoice to an advertising agency, the latter would then add another six per cent in the next bill when issuing an invoice to its customer.
“Based on a description of the new guidelines for advertising services to be released soon, there will be a double taxation impact since the SST system is a one-tier tax system, where tax charges are imposed on each invoice,” said the source.
He added that the SST system implemented was different from the SST regime introduced earlier and the Goods and Services Tax.
The source said the double taxation impact would increase customers’ costs.
That situation, as the source pointed out, would make the industry lose its competitiveness.
He said industry representatives requested that the six per cent tax was not charged to customers who bought advertisements as the SST was imposed on media owners.
However, the Customs insisted that the new SST system was a single-tier tax system, where tax was charged per invoice.
“The Customs Department explained that the taxation policies needed to be consistent across the industry to ensure uniformity,” said the source.
He said the department had also informed that any changes to the current guidelines was within the guidelines set by the Finance Ministry.
Therefore, any exception would be decided by the ministry, said the source.