KUALA LUMPUR - Malaysia will impose a tax of between 5 and 10 per cent on the sale of goods, while services will attract a 6 per cent levy when a new tax regime comes into effect on Sept 1, the country's customs chief Subromaniam Tholasy said on Thursday (Aug 30).
The Sales and Services Tax (SST) is being reintroduced after the government led by Prime Minister Mahathir Mohamad repealed an unpopular goods and services tax (GST) earlier this month.
The GST, which covered a broader range of items and services compared with the SST, has been set at 6 per cent.
A total of 5,443 consumer items have been exempted from the sales tax. The figure is 10 times the number of goods that were exempted from the now-repealed Goods and Services Tax (GST).
Only 545 consumer items were exempted from GST when it was introduced in 2015, reported The Star newspaper.
Among the items that will not be taxed are live animals, daily food items like rice, cooking oil and bread, general goods like newspapers and sanitary pads, and vehicles including bicycles, motorcycles below 250cc, and forklifts.
Private hospitals and domestic flights, except for rural air services, will not be taxed either.
Subromaniam also said at the media briefing on Thursday that the number of service tax-applicable businesses is 43.49 per cent compared to 65.85 per cent of services that were GST-applicable.
"There were 472,000 business that were registered with GST, but we expect only 80,000 businesses to register with SST," he said.
"About 85 per cent of businesses will be out of the tax net," he was quoted as saying by The Star newspaper, adding that this would help reduce prices as small manufacturers, cottage industries and small retailers will not be burdened by taxation.
Finance Minister Lim Guan Eng said at the media briefing on Thursday that the SST threshold for eateries will be increased to RM1.5 million (S$500,000), reported The Star.
This means only eateries that make RM1.5 million and above annually will be subject to SST.
"We received feedback from owners of coffee shops and nasi kandar restaurants, (and) they have asked for the threshold to be increased from RM500,000 (under the GST).
"Some have asked for it to be increased to RM3mil annually, which it is a bit too much.
"So only if your annual turnover is above RM1.5mil will you be subject to SST," Lim said at the briefing on SST at the Treasury building.