Expert: SST will not have much effect on service charges

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

According to tax expert Norsa’adah Ahmad, this was because the 6% 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 will remain the same,” she said.

Norsa’adah, who is also a member of the Malaysian Institute of Accountants, did not discount the possibility of double taxation on the price of food and drinks in eateries.

She said a 10% sales tax is imposed on certain products like canned drinks at the production stage and restaurants may have to 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, forwarding agents, architects, engineers and valuers, as well as security, lotteries, telecommunications, paid television, legal services, accounting services, parking, car rentals, advertising, domestic services, information technology services, credit cards and electrical services.

Hoteliers also do not expect an increase in room rates with the SST, except for those seen during peak periods such as school holidays.

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