Biscuits, Shampoos, Credit Cards - 6 Commonly Used Products & Services To Be Taxed Under SST

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Do you know what's exempt and what will be charged under the new tax scheme?

The three-month-long tax holiday is almost over, with the arrival of the Sales and Services Tax (SST) on the scene. The most talked about topic  (“what is SST?”) for the past few months, many Malaysian consumers are anxious about the reimplementation of the tax regime.

The Sales Tax rates may vary depending on the item. For Service Tax, the rate has been fixed at 6% for most services across industries, excluding the provision of credit card or charge card services (read more about it on point no. 1).

 

What is SST?

For a complete list of SST-taxed and SST-exempted consumer products and services, check out the Royal Malaysian Custom’s Department’s Sales and Services Tax 2018 page.

The long list comprises of hundreds of pages, so we thought we’d highlight a few consumer products and services that are most commonly used by Malaysians. You might want to stock up on a few items while you can, before SST starts this Saturday, 1 September. So, what are the most common consumer products and services that have been taxed under SST? Find out more so you’ll be able to revise your monthly budget and spendings.

 

1. Credit card or charge card services

what is sst

Source: Pixabay

One of the first things to establish when you ask what is SST is the tax rate on credit cards. According to Customs, a specific tax rate of RM25 (per card, per year) is imposed upon issuance or renewal of a principal or supplementary credit card or charge card. For those interested in getting a credit card, don’t be discouraged just yet. You can offset the RM25 tax by looking for cash rebates, redeemable gifts, reward point systems or other benefits offered by many credit card providers at the moment. If you prefer cash rebate, don’t forget to check out some of the best options in Malaysia right now

2. Certain grocery items

what is sst

Source: Freepik

If you’re not confused by what is SST, you’ll be glad to know not all items are charged with this tax! While most grocery items are exempted from SST, there are a select few with 5% sales tax, and they are butter, almond, walnut, biscuit, curry paste, flavouring for fried rice and noodles. Meanwhile, household items like dish soaps and sweet items like candies and chocolates come with a 10% sales tax.

The government also aims to implement a ‘soda tax’ on carbonated drinks to curb the rising number of diabetes patients in the country and to promote a healthier lifestyle.

 

3. Certain baby products

what is sst

Source: Freepik

Infant food products are notoriously expensive in our country, and proud moms and dads can finally heave a sigh of relief as they are exempted from the sales tax, according to a recent report by The Star Online.

To be specific, the exempted infant foods are the ones based on cereals, milk, soy and for lactase deficiency. Meanwhile, baby products with 10% sales tax are baby shampoos and baby powders.   

 

4. Personal hygiene products

what is sst

Source: Freepik

Personal hygiene products with a 10% sales tax include talcum powders, hair shampoos, body shampoos, toothpaste, tissues, and toilet papers.

 

5. Other taxable consumer products

what is sst

Source: Freepik

Other consumer products with 10% sales tax include motorcycle helmets, toothpicks, and electrical appliances, such as washing machine and refrigerator.

For tobacco products, there’s a 10% increase in prices. Based on The Borneo Post report, new prices (for 20-stick cigarette packs) should amount to RM18.70 from RM17 per pack for premium brands; RM17.05 from RM15.50 per pack for aspirational premium brands; and RM13.20 from RM12 per pack for value-for-money brands. The report also mentions that the sales tax charges differ from excise duties, which are imposed for each stick sold.

Meanwhile, alcohol products will be subject to a 10% sales tax. According to The Edge Markets, a 6% service tax will also be charged to consumers purchasing alcohol or tobacco at a food and beverage (F&B) outlet, in addition to the 10% sales tax.  

 

6. Taxable services (with 6% tax)

what is sst

Source: Freepik

See the list of taxable services with 6% tax:

TAXABLE SERVICES
Hotel 
Including:
  • Serviced apartment
  • Homestay
  • Inn
  • Boarding house
  • Rest house
  • Lodging house

Service tax will be charged on the actual value of taxable service provided.

Insurance and Takaful
Including:
  • All B2B insurance
  • All B2C general insurance or takaful (excluding medical insurance or medical takaful)

The service tax will be charged on the actual premium paid.

F&B preparation services
Including:
  • Restaurant
  • Café
  • Catering
  • Takeaway
  • Food truck
  • Retail outlet
  • Hawkers

Service tax will be charged on the actual value of taxable service provided.

Electricity – Service tax will only be imposed on consumers for electricity usage of more than 600kWh.
Clubs
Including:  
  • Nightclub
  • Private club
  • Golf club and golf driving range

Service tax will be charged on the actual value of taxable service provided.

Gaming
Including:  
  • Casino
  • Game of chance
  • Sweepstakes
  • Gaming machines
  • Lottery
  • Betting

Service tax will be charged on a collection, based on a formula.

Telecommunication
Pay-TV
Forwarding agents
Legal
Accounting
Surveying
Architectural
Valuer
Engineering
Consultancy (with the exception of medical consultation)
Employment agency
Security
Management services
Parking
Motor vehicle service or repair
Courier
Hire and drive car services
Advertising
Rural Air Services
IT services

what is sst

Written by BBazaar Malaysia.

BBazaar.my is a leading online marketplace in Malaysia that helps consumers compare and apply for a credit card, personal loan, home loan, car loan and insurance.

 

If you’re confused about what is SST, you’re probably not alone. But at least you know some of the most common items that are charged under the new tax scheme!

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