Before the GST (Goods and Services Tax), there was the SST (Sales and Services Tax). In April 2015, the GST came into effect, and the SST was no longer. Now, the tables have turned again, and the SST will be implemented in September 2018.
The GST is a tax on most products and services for domestic consumption at every level in the production process. For companies with revenue above RM500k, GST can be claimed as input tax. GST was implemented in April 2015 replacing SST. Clearly a popular type of tax, GST is the most commonly used form of taxation used by 160/190 countries globally. In certain countries, they know it as Value Added Tax (VAT) instead. (Sourced from: http://mypf.my/2018/05/18/gst-vs-sst-in-malaysia/)
The SST is actually covered by 2 separate tax laws on a wide variety of goods and services at a single level implemented in 1970s. The Sales Tax Act 1972 is a single-stage tax charged typically at the manufacturer’s level, whereas the Service Tax Act 1975 is a single-stage tax charged at the consumer’s level except at tax free zones. Before being replaced by the GST, the sales tax was at 10% and service tax was at 6% respectively. (Sourced from: http://mypf.my/2018/05/18/gst-vs-sst-in-malaysia/)
The “Tax Holiday”
As I’m sure most of you already know, the current GST will be at zero-rate effective 1st of June 2018. Simply put, till September comes, consumers can enjoy a shopping period of no tax for three months, hence the name “tax holiday”!
Why the reintroduction of SST?
Last week, the Finance Ministry announced that the reintroduction of the SST is to make up for the deficit in government revenue. Today, speaking at a press conference, our Prime Minister Tun Mahathir has confirmed this statement, and set the effective date to be on the 1st of September.