No SST for manufacturers in free zones, says Customs
KUCHING: Severl benefits arise from the upcoming implementation of the Sales and Services Tax (SST) 2018, or SST 2.0 by September 1, such as not being any SST for manufacturers within the Free Industrial Zone (FIZ).
During the Handholding SST briefing with the Royal Malaysian Customs Department (Customs) Sarawak yesterday on the transition to SST, Customs senior assistant director 1 for the SST division Noelle Lily Ronald Morse revealed that the proposed SST 2018’s special areas (deemed outside Malaysia) which will not be charged with SST include industries or sectors which are in the Free Zone.
The Free Zone comprises of FIZ and Free Commercial Zone. When applied to Sarawak, Noelle said this is applicable for the manufacturers in the FIZ in Samajaya.
“This means that there will not be any (SST) for manufacturers within the FIZ in the Samajaya zone,” she added.
The Handholding SST session, which was attended by about 1,000 participants, aimed to give an insight into the implementation of SST for various industries registered under the Sales Tax Act 2018 and Services Tax Act 2018.
The program also provided exposure to the federal department staff, along with other state agencies, related either directly or indirectly to SST. Customs deputy director- general Datuk Paddy Abdul Halim was also present at the session.
Noelle said this also applies to manufacturers within the FIZ who transact or sell goods or provide services to the licensed warehouses or licensed manufacturing
This means that there will not be any (SST) for manufacturers within the FIZ in the Samajaya zone.
warehouses.
Another special area proposed is under the Joint Development Area (JDA) which is administered by the Malaysia-Thailand Joint Authority on behalf of the two governments to exploit and develop non-living natural resources. It is mostly related to the oil and gas industry.
“JDA, licensed manufacturing warehouse, licensed warehouse, free zone, these are considered to be special areas and there is no (SST) within and between these areas,” she saidd.
Compared to the GST, Noelle said that under SST, goods not subjected to tax are 10 times larger than the GST, with GST (zero per cent) at 545 items and SST (exempt) at 5,443 items.
Noelle also revealed that under the list of proposed scope of (taxable) services 2018, there are four new additions in the form of domestic flight (except rural air services), gaming, IT services and electricity.
“For domestic flights such as from Kuching to Kuala Lumpur, there will be services tax charged when consumers purchase their tickets,” she gave as an example.
On the exception of rural air services, Noelle said that this only occurs in Sarawak and covers rural routes such as Miri to Bario or Mukah.
As for electricity, services tax will be charged on a business to domestic consumer (B2C) basis, indicating that this is applicable only for household consumption. The cap is at 600 kilowatts per hour and service tax will be charged on the actual value of taxable service provided.
“For electricity, we propose it to be service tax on electricity providers to domestic users if they consume more than 600kwh.” Turn to Page B2, Col 5
Noelle Lily Ronald Morse, Customs senior assistant director 1 for the SST division