So far, about 5,443 items are exempted from the Sales and Services Tax (SST), while a total of 5,612 items are subject to 10% sales tax and more than 600 items will be imposed with a sales tax of 5%, according to the NST Online.
Among the latest items that are exempted include peanuts, salted, dried and preserved fish, seafood, pewter products, and imported components for locally-assembled vehicles.
There’s been a lot of confusion regarding SST among consumers, even before the new tax regime was implemented last month. Without a complete list of chargeable items, consumers are finding it hard to deal with the tax transition. But with more items expected to be exempted by the year-end, the government aims to gradually ease the confusion.
Economist Carmelo Ferlito recently pointed out that the SST’s current structure was a muddle because the rates varied and the list of exempted goods and services was too long.
The senior fellow at the Institute for Democracy and Economic Affairs told FMT News that businesses could exploit the complexity to raise prices to unreasonable levels and to make false declarations on their collections.
There have been concerns and complaints raised, and we’re seeing a lot of feedback and suggestions regarding SST in the past month, mainly from Malaysian consumers, experts, and also businesses.
Here’s a list of SST-related consumer concerns raised in the past month and the highlights that you should know:
1. “RM10 reload gets you RM9.43 of credit” – mobile prepaid plan users
For those on a mobile prepaid plan, you might have noticed that the usual RM10 reload had only amounted to RM9.43 because of SST earlier in September. Consumers took to social media to complain about the deduction.
Tech website Soya Cincau even made a check with the local telcos, and they found that consumers got slightly less credit for all reloads or top-ups. The RM0.57 deduction is inclusive of both credit and 6% SST.
Four days after SST was implemented, Finance Minister Lim Guan Eng announced that Malaysians will no longer have to pay SST for mobile prepaid services provided by telecom service providers.
According to NST Online, prepaid customers will receive the maximum credit value when they reload as they will no longer be charged with SST through the exemption.
2. “Pricey lifestyle products” – general consumers
Under the previous tax regime, shopping for non-food items was mainly burdensome on our wallet, as most lifestyle-related products came with a 6% tax. Until late last month, many lifestyle products were subjected to a 10% sales tax, which led to many complaints about lifestyle products being too expensive.
On September 26, the Finance Minister finally made an announcement that the government will lower the sales tax rate from 10% to 5% for cosmetic products, beauty and skincare products, mobile phone accessories, watches, retreaded tyres, new tyres, and inner tubes for motorcycles.
3. “Prices of residential properties are still out of reach for many Malaysians” – aspiring property owners
While aspiring property owners will be relieved to know that properties, including lands, will not be taxed, the cost of purchasing a property may not change as there are other services involved in the construction and in the transaction of a property that is not SST exempted, according to a recent report by The Edge Markets.
For example, property buyers should expect a greater tax burden for the use of professional services rendered by solicitors, architects and engineers under SST. The same report also featured a Homeowners’ checklist of SST-exempted items which might be useful to buyers.
In late September, the finance minister gave a stern warning to property developers to reduce house prices on a national level. So far, developers in Penang have agreed to reduce prices between 6% and 10%, according to The Star Online.
“If this does not happen, then the government may have to rethink the exemption given and find new ways to make houses affordable, especially to first-time buyers,” Lim Guan Eng said in the report.
4. “Confusing cigarette pricing” – smokers
The government has made it very clear that it will not reduce prices for sin stocks, particularly tobacco products and alcohol. However, around the time when SST took effect, a price war had started in the market, resulting in confusion among consumers when it comes to new cigarette pricing, which led to complaints.
In mid-September, tobacco company JTI Malaysia urged the Ministry of Health (MoH) to clarify the government’s position on the implementation of SST on cigarettes. According to JTI’s statement, there were products where prices had increased for a moment only to revert to old pricing days later.
Until now, tobacco consumers are still left confused by the cigarette pricing, as MoH failed to recommend a minimum level of increase in retail selling prices. The absence of price guidance from the ministry has only contributed to an ongoing price war.
As of October 8, The Edge Markets reported that a 20-stick pack of Dunhill (BAT Malaysia) or Mevius (JTI Malaysia) cigarettes now retails for RM17 — 50 sen lower than earlier this month, and cheaper than a Marlboro pack, which is still selling for RM17.20.
5. “Dining out is expensive” – foodies
Many foodies were worried that dining out will be expensive after SST, and have expressed their concern over the matter. However, only 4,372 restaurants are subjected to SST, according to NST Online.
A total of 75% out of the 17,574 shops and restaurants, which were previously subjected to GST, will not impose SST on their customers. In the report, the finance minister said that only restaurants with annual threshold exceeding RM1.5 million would impose SST of 6% to their customers.
Got an SST-related issue? What you can do as a consumer
Almost 600 complaints on SST were made since September 1, according to The Malaysian Insight, mainly regarding unreasonable price hikes or confusion on prices.
As a consumer, you can make a direct report to the Ministry of Domestic Trade and Consumer Affairs (KPDNKK) via WhatsApp. Send your message to this number, 019-2794317. Don’t forget to include your full name, a copy of the receipt, and the name of the business that you wish to report.
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