As of September 1, 2018—after a three-year experiment with a Goods and Services Tax (GST)—Malaysia reinstated a Sales and Service Tax (SST), similar to the SST in place before April 1, 2015.
So . . . what’s changed? Here are some key differences:
GST generally applied to any supply of taxable goods and services made in Malaysia by a taxable person in the course of their business. It also applied to imports, though exports were zero-rated. SST, however, is significantly narrower in scope. It generally applies to registered manufacturers on taxable goods they manufacture and sell, use or dispose of, as well as a number of specified categories of services including accommodation, food and beverages, night clubs, golf clubs, gambling, enumerated professional services, credit card services, and certain types of insurance.
GST was a multi-stage tax, applying at every stage in the supply chain, with a deduction scheme to ensure neutrality for businesses. In contrast, SST is a single-stage tax, and therefore less comprehensive.
Before June 1, 2018, the standard rate of GST in Malaysia was 6% for both goods and services. This rate was reduced to 0% as of June 1, 2018, when consumers effectively enjoyed a holiday from indirect tax. There was no reduced rate, which contributed to administrative simplicity.
The SST is generally levied at a 6 percent rate for taxable services and a 10 percent rate for goods. There are fixed rates for certain credit card services, and oil and gas products, and a 5 percent rate for certain goods, such as some foodstuffs and construction materials.
Under the GST regime, certain supplies, such as exports, were zero-rated, meaning that no GST was charged and an input tax credit was allowed for the related GST expense. The SST does not provide for zero rates, though exporters are entitled to some reliefs.
Input tax deductions are provided for under GST, but not under the SST, as it is intended to be a single-stage tax.
By Lee Hadnum, Editor, and Joanna Norland, Technical Editor, Bloomberg Tax
The Bloomberg Tax VAT Navigator provides detailed coverage of the new Malaysian SST. To access the VAT Navigator, and further in-depth analysis and expertise, request a free trial of Bloomberg Tax.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to firstname.lastname@example.org.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to email@example.com.
Put me on standing order
Notify me when new releases are available (no standing order will be created)