Two Significant Features in SST for Manufacturers, says Tax Expert


Axcelasia Taxand held a press conference in conjunction with a half day seminar on the ‘Reintroduction of the Sales and Services Tax (SST)’ slated to be implemented on September 1, 2018 after the bill is passed in parliament.

Finance Minister Lim Guan Eng had said earlier that under the reintroduced SST, the provision of services will be taxed at 6% while the sales of goods will incur a 10% tax.

The ‘Axcelasia Taxand’s SST 2.0’ seminar held in Hotel Istana on August 3 focused on the new tax regime to provide information on its key features and how this tax will impact businesses. A separate session was also held on the issues arising from the closure of the GST later in the day.

At the press conference, Axcelasia Group Chairman, Dr Veerinderjeet Singh said the implementation of the SST was currently at a transitional stage but “good things have been added on”.

“One is the threshold. It has been established at RM500,000 which is the same as it had been under the GST,” he said, elaborating that having one threshold made sense as it had simplicity thereby making it easier to manage.

“From the historical perspective, if you look at the old SST, there were different thresholds for the different businesses and sectors. So having one threshold makes sense.”

The second thing they noted, especially in the context of the sales tax is the availability of online submissions, filing, payments and applications.

“That is obviously the way forward in terms of using technology to provide electronic filing. Electronic filing was already implemented in GST so I think it is logical that we allow all this to continue with the SST,” he said.

Veerinderjeet noted that the other interesting thing connected with the electronic filing of the sales tax was the issue of intermediary manufacturers seeking exemption.

“If they buy the raw materials from someone, there would be a sales tax or if they manufacture and sell, there would be a sales tax.  But now, via the online application, they wouldn’t have to seek exemption at every level so that only their final product would be subject to the sales tax. Otherwise, you would have a sales tax at every level.”

Previously under the old sales tax before it was replaced by the GST on April 1, 2015, manufacturers had to apply, fill up the forms, submit to the Customs Department, and then physically go to Customs themselves to clarify and that took a lot of time and paperwork. But now with online applications, electronically submitted exemptions can be applied at one of the stages in the manufacturing process so that at the last stage of exporting the manufactured product, there would be no further sales tax imposed.

A single stage levy of taxes is important, Veerinderjeet said, as you need to keep the exports competitive.

“So these are the two good things about the current SST: The threshold is fixed, similar to GST, and there is electronic filing and submissions.”

Managing Director of Axcelasia Taxand Leow Mui Lee added that manufacturers will need to determine if the raw materials they are buying are subject to the sales tax and if they aren’t, and these materials are going to be converted into finished products for selling which are taxable, then the sales tax on the raw materials will be exempted.

“So it’s like freezing the sales tax on the incoming raw materials and this relieves manufacturers from having to pay sales tax upfront,” she said, adding this facility is significant to the manufacturer.

Axcelasia Taxand is part of the Axcelasia Group which offers integrated professional services.  Axcelasia Taxand Malaysia offers specialist tax services and is a member of the Taxand Global Organisation.


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