Moving from GST to SST

Goods and Services Tax (GST) is a tax on most products and services for domestic consumption at every level in the production process.

Sales and Services Tax (SST) are covered by two separate tax laws on a wide variety of goods and services at a single level. Prior to replacement by GST, the sales tax was at 10% and service tax was at 6%.

GST V SST

	GST	SST
Tax revenue	RM45b	RM20b
Tax base	Narrow	Broad
Transparency	High	Low
Tax rate (%)	6	6-10
Tax stage	Multi	Single

Impact of GST to SST will be lower collection to be covered by streamlining expenditure, prioritizing projects and examining new avenues for revenue generation from GLCs and GLICs. SST will be reintroduced on 1 September 2018. SST will be 5% or 10% for sales (goods) and applies to certain manufactured or imported goods at point of manufacturing or import. SST for services is 6% and only for certain services.

Small businesses with turnover of RM0.5 million and above will fall within the SST threshold. This is the same threshold for GST. It is advisable to consider a higher threshold as many small and medium-sized businesses will be impacted. In Australia, the Government increased small business entity turnover threshold from AUD2 million to AUD10 million. It is a major relief for genuine small businesses who just need to get by.

Why don’t we do RM2 million as the new turnover threshold for SST instead of the present RM0.5 million?