5,000 items to be exempted under SST

SST only imposes tax on 38% of the total items in the country, compared to 60% under the GST

By AFIQ AZIZ, P PREM KUMAR & DASHVEENJIT KAUR / Pic By ISMAIL CHE RUS

The Sales Tax Bill 2018 and Services Tax Bill 2018 that were tabled at the Dewan Rakyat yesterday are expected to include 6,400 proposed items to be taxed, compared to 11,197 items that were covered under the Goods and Services Tax (GST).

Royal Malaysian Customs Department DG Datuk Seri Subromaniam Tholasy (picture) said should the bills be passed, about 5,000 items are proposed to be exempted, as outlined by the 292-page proposal which will be discussed in Parliament.

“The number is 10 times higher than the GST system, which exempted only around 500 items,” he told reporters at the “SST Reborn! Transition from GST to SST” seminar in Kuala Lumpur yesterday.

He said the Customs Department is expected to complete the hand-holding programme with all 70,000 companies that are registered under the Sales and Services Tax (SST) 2.0 system by the end of this month.

Subromaniam said the agency had started the engagement session last week and about 14,000 employees from 5,000 firms had already attended the programme.

He said the department is targeting to cover all the 65,000 remaining employers before the SST 2.0 implementation, slated by Sept 1, 2018.

Subromaniam said the aim is achievable as the tax system is much easier to be understood and consists of a smaller basket of items.

“It is not as complex as the GST, which involves up to 472,000 companies.

“In the GST CPI (Consumer Price Index) basket, 60% of the items in the country fall under the tax regime.

“On the contrary, SST only imposes tax on 38% of the total items,” he said.

Subromaniam said the handholding programme was conducted much earlier before the Parliament’s consent in order to catch-up with the implementation next month.

“We do not want the implementation to be disturbed and we are already granted by the Ministry of Finance to run this programme.”

The Customs Department is expected to mobilise its 14,000 employees to conduct and manage the briefings in all states this month.

Meanwhile, Finance Minister Lim Guan Eng said the country’s current account could fall into deficit if SST is not implemented by September 2018.

Lim said the deficit current account balance will directly impact Malaysia’s sovereign credit ratings, if the SST is not enforced as per the government’s estimation.

He said the Sales Tax Bill 2018 and Service Tax Bill 2018 that were tabled at the Dewan Rakyat yesterday should receive the approval of the Senate — which is currently still controlled by Barisan Nasional (BN) lawmakers.

“It is an issue since the Senate is still being controlled by the Opposition. Will the BN order the Senate to reject the bills to implement SST?” Lim told Dewan Rakyat yesterday, while winding up debates on the royal address.

Lim said the democratic mandate given to Pakatan Harapan should be respected by all parties.

He said when the new federal government intends to introduce new laws, to replace colonial and unwanted laws, it should receive support from both the lower and upper houses in Parliament.

“The Senate is an institution which is not elected by people, but appointed by the previous government. Thus, I expect the Senate members can respect the decision taken in the house filled with elected representatives,” he explained.

All new laws and amendments, if passed by the Dewan Rakyat, will have to seek approval from the Senate. Although a “no” in the Senate doesn’t mean the bill is with-drawn, it would revert to the Dewan Rakyat for more scrutiny.

There are currently 51 Senate members, a combination of appointments by Yang di-Pertuan Agong and state legislative assemblies.

Most of them were appointed by the previous BN government and are currently serving their three-year term. The Senate is chaired by Tan Sri SA Vigneswaran — who is also MICpresident.

Malaysia’s current account surplus soared to RM14.98 billion in the first quarter of 2018 (1Q18) from RM4.79 billion a year ago. It was the largest current account surplus since 2Q14.