SST is made up of two separate taxes that apply to a narrower set of goods and services as compared to GST: 6% service tax on services provided in Malaysia (with a specific rate for credit/charged card) 10% sales tax, which will be charged on selected products and services.
Malaysia’s Sales Tax
The Sales Tax is a single-stage tax which is imposed at import and production levels. All taxable products which are sold in Malaysia are taxed in the manner prescribed by the Sales Tax Act 2018. According to this act, the government is only to collect sales tax at the level of the manufacturer. Furthermore, the Sales Tax is to be incorporated into the price of the taxable product which is to be paid by the consumer. However, not all products are necessarily to be taxed at the same rate. It is for this reason that goods which are not exempt from the Sales Tax are to be taxed at different rates such as 5% or 10%.
Malaysia’s Service Tax
The Services Tax is an indirect tax which is imposed on any taxable service which has been provided by a taxable individual in Malaysia and was provided in the name or with the approval of a company. However, it should also be noted that no taxes are imposed on services which are either exported or imported. Taxes on services imported and exported are not charged. Service providers are to register according to the 2018 Service Tax Act if the total amount of the taxable services provided over a period of 12 months is RM500,000 or more. However, this stipulation does not apply to all business activities in Malaysia. Operators of bars, restaurants, or any location at which where food and beverages are sold whether eat-in or take-away, excluding school cafeterias as well as those which are operated by a religious institution or organisation, catering services, and food tribunal operators, the SST registration limit is RM1,500,000.
Details About SST
In Malaysia, the Sales and Services Tax (SST) was introduced to replace the Goods and Services Tax (GST). SST is imposed on both domestic and imported products alike. However, in many ways, SST bears similarities to GST. Despite these similarities, one important difference lies in the number of products which are exempted from SST. There are far more products which are exempted from SST than there ever were which were exempted from GST.
According to the laws regarding SST, all goods, products, and services purchased on the islands of Langkawi, Tioman, and Labuan are to be exempted from the tax. SST is comprised of two elements. The first of these is that the service tax is to be levied and paid in conjunction with taxable services which are provided in and supported by any individual in Malaysia who is taxable. The second of these is that the sales tax on manufactured and produced local goods is either to be imposed at the time of purchase of the goods or at the time of the disposal or sale of the goods by the producer.
Why SST Was Introduced
One of the SST’s advantages is a lower cost of living in Malaysia because the seller pays the sales tax at the point of sale only once. Furthermore, the service tax limit with regard to food and beverages has risen to RM1.5 million per year and the cost of food supply paid by hawkers, food vendors, and small restaurants has also been reduced. In this way, such businesses benefit tremendously from the effects of SST. Of course, all companies in Malaysia must first ascertain if they are to be subject to SST. The current regulations define all producers and service providers who are to be subject to SST. Thus, producers and service providers who are uncertain of their status pertaining to SST should take a closer look at the regulations for further information.
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Here, you will find detailed information about Malaysia’s Corporate Tax System. Paul Hype Page & Co helps companies with strategic tax planning, tax advisory, and accountancy services.
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IRB (Inland Revenue Board) governs Malaysia’s tax system, helps develop a stronger economy, better environment and a more vibrant economy. All companies, regardless of industry, have a legal duty to pay taxes.
Malaysia attracts investments from around the world by reducing its corporate income tax rate and introducing different tax incentives. Malaysia has one of the lowest corporate tax rates in the world.
As your company’s Tax agent , Paul Hype Page & Co Chartered Accountant will be fully responsible for the practice of ensuring that these conditions are met. It is important that we be highly qualified and well versed in local regulations and corporate laws, as we are responsible for the upkeep of important company files, tax reports and tax records.