SST: Not much difference for service sector

KUALA LUMPUR: The implementation of the Sales and Services Tax (SST) beginning this Saturday is not expected to make a major difference in the price of services.

According to tax expert Norsa’adah Ahmad, this was because the six per cent tax imposed on services such as those provided by hotels, insurance, and food catering companies was the same as that imposed by the Goods and Services Tax (GST) before this.

“There should not be much difference with the previous price...most (prices) will remain the same.

“Compared to the effect (of SST) on the price of other goods where the public is watching to see if prices increase or not, the price of services is not expected to show much difference,” she told Bernama yesterday.

However, Norsa’adah who is also a member of the Malaysian Institute of Accountants (MIA) did not discount the possibility of double taxation on the price of food and drinks sold in food outlets.

She said a 10 per cent sales tax is imposed on certain products like canned drinks at the production stage and it was not impossible that restaurants would increase their prices to cover the service tax.

Among the services on which the SST is imposed are those provided by night clubs, private clubs, golf clubs, casinos, lotteries, telecommunications, paid television, legal services, accounting services, forwarding agents, architects, engineers, valuers, security, parking, car rentals, advertising, domestic services, information technology services, credit cards and electrical services.

Meanwhile, hoteliers also do not expect an increase in room rates with the SST except for the usual increase during peak periods such as school holidays due to high demand.

However, executive director of the Malaysian Association of Hotel Owners Shaharudin M.Saaid said if the mechanism for the tax was the same as the previous SST, the room rates are expected to decrease.

“If the mechanism is the same as SST 1.0 before the GST was imposed, then room rates should be cheaper as the SST 1.0 did not impose a six per cent tax on service charges,” he said.

He said under the GST, a six per cent tax was imposed on service charges, resulting in an increase in the price of rooms and other services.

However Shaharudin hoped the mechanism for the implementation of the new SST is explained to the hotels quickly to avoid any confusion.

“We are waiting for clarification from the Royal Malaysian Customs Department,” he said.