EATERIES earning more than RM1,388 daily will have to charge a 6% service tax, meaning Malaysian favourites like roti canai and teh tarik will be taxed, said an industry group.

Indian-Muslim eateries, popularly known as “mamak”, fall under the service provider category in the new sales and services tax system, which will be rolled out on September 1.

The Malaysian Indian Muslim Restaurant Owners Association (Presma) told The Malaysian Insight that service providers making RM500,000 annually will have to charge SST.

Therefore, said Presma president Ayub Khan Muhamad Yakub, mamak outlets and stalls hitting the threshold are required to tax customers.

“All mamak restaurants under Presma have to charge SST because we meet the threshold. Some open-air mamak stalls, too, will have to charge SST, as they make more than RM1,388 per day.”

He said the amount in daily sales adds up to an annual revenue of more than RM500,000.

In the pre-2015 SST system, the threshold for service providers, including restaurants, was set at RM3 million, thus exempting mamak outlets.

“We will send a memorandum to the government this week to allow mamak restaurants to be exempt from the new SST.

“This is because 80% of our customers are low-income folk.

“Let SST be charged by hotel restaurants and high-end outlets, as the people who eat there are rich.”

According to the Customs Department, restaurants are listed as service providers and required to charge SST.

Other services that will charge SST include cable television, mobile-phone service, vehicle repair, hotel and insurance.

Besides a flat rate of 6% for services, an SST rate of either 5% or 10% will be levied on manufacturers and importers of certain goods.

The government has said some 68,000 businesses will charge SST, compared with the 400,000 that charged the goods and services tax.

The SST Bill is expected to be tabled in the Dewan Rakyat next week.

During the GST era, said Ayub Khan, almost all of Presma’s members charged the unpopular consumption tax.

However, 60% absorbed GST as operational cost rather than pass it on to consumers.

“Those who could afford to do so, such as those in suburban and rural areas, absorbed the tax and reduced their profit margins,” said Ayub Khan.

“But those in cities, where rentals are high, could not afford to do so, and had to pass on the tax to customers.

“We will see the same thing happening in September if the government goes through with its plan.”

Presma has 4,000 members nationwide. – July 27, 2018.