The reintroduction of the Sales and Services Tax (SST) will see its rate set at 10% for sales and 6% for services. This was announced by Finance Minister Lim Guan Eng on 16 July 2018, who informed that the Bill on SST will be passed in Parliament sometime in August.

GST has drawn quite a bit of flak over the years and public opinion is generally that GST has caused prices of goods and services in Malaysia to go up without the country seeing significant benefits to the additional tax revenue collected. For businesses, GST claim back on tax has been difficult, can be declined, and requires a minimum RM500,000 in annual sales before being claimable. There are also middle men who take advantage of GST to raise prices and use the tax as a convenient reason to make more money.

While SST will cause the government a tax revenue drop, estimated at RM25 billion, SST is seen as a less progressive form of tax and many countries have moved on to GST. Experts have said that prices should come down but there could be a mixed impact from the reintroduction. The sales tax is based on the manufacturing cost or import cost, while the service tax could cover a wider range of services, therefore a higher price or charges for services rendered on the whole.

We put the 2 tax systems side-by-side as a quick comparison and lay it out easily for all to understand.