SST will not kick in immediately

PETALING JAYA: The Sales and Services Tax (SST) will not kick in immediately once the Goods and Services Tax is adjusted to 0%.

The implementation of the SST depends on when the Government would make a decision on it, said Customs Department director-general Datuk Seri T. Subromaniam.

“But Customs will make sure the operational issues are minimised and we have a smooth transition,” he said yesterday.

On Wednesday, the Finance Ministry announced that goods and services subjected to GST would be zero-rated from June 1.

The ministry said the reduction of GST rate from the current 6% to 0% would be implemented nation- wide until a further announcement was made.

Customs, said Subromaniam, had also uploaded a list of “Frequently Asked Questions: Transitional 6% to 0%” on its website for consumers and traders to better understand the changes in the taxes.

Restaurants, retailers and housing developers welcomed the move to set GST to 0%, adding that it would spur consumer growth.

Malaysian Muslim Restaurant Owners Association president Ayoob Khan Muhamad Yakub said he was pleased with the move.

He said the food industry was badly affected by the introduction of GST as consumers had to bear the brunt.

“With the lifting of GST, we are pretty sure the food business will improve and furthermore, the rakyat will enjoy food at lower prices.

“Food operators should also abide by the zero-rating directive and implement it on the date set,” he said.

Real Estate and Housing Developers’ Association Malaysia (Rehda) president Datuk Seri Fateh Iskandar Mohamed Mansor said the move was lauded because Rehda had been pushing for materials used in building affordable homes to be exempted from the tax.

“However, we will still need to discuss in-depth with our members and tax consultants on the reintroduction of SST,” he said.

Fateh Iskandar said the new move would definitely delay the decision of consumers in buying “big ticket” items like houses until June 1.

“By then, prices of construction materials should be reduced. But we hope contractors will not profiteer by insisting on maintaining high prices,” he said.

Malaysian Association of Hotels president Sam Cheah said the industry was waiting for more information on implementing SST.

“The prices of hotel rooms and services will depend on whether or not we need to charge service tax as we did prior to GST.

“There will not be an immediate change in demand as there are other issues to be addressed such as illegal operators, human capital and tourism tax,” he added.

SME Association of Malaysia president Datuk Michael Kang said the mechanisms of the new system to replace the GST might cause some confusion.

“We need to keep an eye on the new mechanism and how the SST works. We need to wait for the Finance Ministry to announce the new system,” said Kang.

He said those not registered under GST would also face challenges as previously purchased goods would include the consumption-based tax.

“So, if consumers go to a shop not registered for GST, the prices will be higher, (and) it will be confusing.

“Let’s see how this works and if the Government will have some ways to help the traders,” he added.