Sarawak sales tax on imported tyres halved
KUCHING: The State Sales Tax (SST) rate for imported tyres, including those on imported vehicles, has been reduced by 50 per cent.
Associated Chinese Chambers of Commerce and Industry of Sarawak (ACCCIS) president Datuk Tan Jit Kee said this follows ACCCIS' appeal for the state government to abolish the SST on imported tyres.
Tan said following a meeting between ACCCIS and Sarawak tyre industry stakeholders last November, a letter of appeal was submitted to the state government, incorporating the views and inputs of all the relevant stakeholders, for Chief Minister Datuk Patinggi Abang Johari Tun Openg's consideration.
“We are delighted to inform that we had received a formal reply to our appeal from the Comptroller of SST notifying the decision of the authority to reduce the tax rate for imported tyres, including tyres attached onto imported vehicles, into Sarawak by 50 per cent effective Jan 4, 2021 until further notice.
“We are pleased that the state government has promptly responded to the plight and appeal of the stakeholders concerned and that ACCCIS is indeed grateful to be able to play an effective intermediary role and serve as a useful consultative platform between the government and the private sector in our quest to provide a conducive and friendly business environment for the entrepreneurs and investors,” Tan told a press conference yesterday.
According him, the appeal outlined that the projected revenue to be collected from the 5 per cent SST imposed on imported tyres amounted to RM10 million for 2021 but the drastic imposition of SST on the essential item would have grave repercussions on the local business community.
He added this would translate into higher operations costs and consequently lead to some knock-on effects on the prices of goods and services, which would be absorbed by end-users and consumers.
The appeal also pointed out consumers, especially those from low income groups would be affected and that most rural folk tended to use more tyres due to the geographical distance that they need to cover.
As such, he deemed tyres to be essential consumer goods for most Sarawakians.
“We applaud the efforts of our state government in strengthening our fiscal position by expanding the revenue base, notably through the collection of the State Sales Tax from the petroleum products, crude palm oil, and crude palm kernel oil, as well as the raw water royalty – however, we have not been able to comprehend the logic of introducing the SST on imported tyres as total revenue collected is not substantial at all to the state's coffers but yet from the perspective of the business community and the consumers in general, its negative consequential impact could be far-reaching.
“There seems to be unfair or inequitable categorisation in the implementation of SST as business operators who import the tyres for their own consumption will be exempted from SST and such a loophole in taxation might be exploited by certain unscrupulous individuals, which would create unfair competition in trade and, at the same time, encourage smuggling activities,” he said.
Tan said the complexity and administrative costs involved in the collection of such SST coupled with the spillover costs passed on to the end-users and consumers would far outweigh the benefits deriving from the projected revenue of RM10 million.
The SST on imported tyres came into effect on Jan 1 last year. Each imported tyre was charged 5 per cent SST, while those attached to vehicles imported into Sarawak were charged based on the size of the vehicle.
Among those present at the press conference were ACCCIS secretary-general Jonathan Chai, assistant treasurer Ho Siew Hua, Sarawak Tyres Dealers and Retreaders Association president Lim King Hong, and Kuching Bicycle and Motor Traders Association president Lau Soon Yiun.