ONLY restaurants with an annual turnover of at least RM1.5 million will be subject to the sales and services tax, following requests from business owners, said Finance Minister Lim Guan Eng.

“After receiving feedback from restaurant operators… they requested that the threshold be increased from RM500,000 to RM1 million.

“And after that, they asked that the threshold be raised further to RM3 million. That’s a little too much,” he told a media briefing on SST’s implementation in Putrajaya today.

“If their turnover is RM1.5 million, they need to pay the tax. If not, they don’t need to,” he said, adding that restaurants earning below the threshold and yet charged customers the service tax would be punished.

“We have our eyes and ears. We have Customs enforcement officers, and they will take action.”

SST, which replaces the unpopular goods and services tax, is set to be implemented on Saturday. Businesses that have yet to register for SST with the ministry are not allowed to charge the tax.

“You can register on September 5, for example, but you have to forgo charging customers the (service) tax until then,” said Lim.

He added that construction materials would be exempt from SST, following feedback from the business community.

Lim said the threshold was increased following complaints from restaurant operators in urban areas.

He said the list of exemptions may be expanded, following more closed-door meetings with business owners in Malacca, Johor, Ipoh, Sarawak, Sabah and Penang.

“The objective is to ensure the prosperity of the people. What’s the point of nice figures if people are not better off?”

The service tax, which is fixed at 6%, will be imposed on other businesses with an annual turnover of at least RM500,000.

They include hotels, nightclubs, private clubs, golf clubs and driving ranges, business-to-business insurance, telecommunications and paid TV, advocates and solicitors, public accountants, surveyors (including registered valuers, appraisers and estate agents), professional engineers, architects, management services, consultancies, employment agencies, private agencies, parking operators, motor vehicles and repair, courier service operators, hired-car operators and advertising agencies.

Newly included businesses under the tax system are betting and gaming providers, transmission and distribution of electricity providers, airline operators (excluding rural air services), and information technology service providers.

Exempt from the tax are veterinary services and private hospitals (for ward and food charges only).

Customs agents employed to clear goods from Customs control are imposed the tax, with no threshold.

A sales tax of either 5% or 10% is imposed on manufacturers, whose sales of goods exceed RM500,000 for a 12-month period.

A total of 5,443 consumer items are exempt from the tax, including live animals, rice, cooking oil, bread, newspapers and motorcycles below 250cc.

Deputy Director-General of Customs Subromaniam Tholasy told reporters at the briefing today that also exempted were women’s menstrual products, such as sanitary pads, panty liners and tampons.

Manufacturing activities that have been exempt from SST registration include tailoring, installation of goods in buildings, and those related to jewellery and optical goods.

GST-registered entities that meet the criteria for SST but are not registered by Saturday need to apply for registration within the month of September.

Since August 16, Lim said, 79,966 businesses had registered a switch from MyGST to MySST with the Customs Department through the auto transfer system.

Of the total, 32,577 businesses have registered for the sales tax regime, and 44,874 businesses for the service tax.

A total of 11,197 goods were covered under GST, which was introduced by the previous Barisan Nasional administration in April 2015, and repealed on June 1 this year.

Under SST, 5,612 goods will be imposed a sales tax of 10%, while another 793 goods, 5%.

SST involves 38% of the consumer price index basket of goods and services, compared with GST’s 60%.

Putrajaya hopes to collect up to RM22 billion from SST this year. This compares with the full-year revenue of RM44 billion for last year when GST was in place. – August 30, 2018.