Mobile prepaid to be SST-exempt from 6 September

When MYR10 equals MYR10, no less
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What’s SST? Aside for being the acronym for Sales and Services Tax, it represents a whole lot of confusion and uncertainty. Sounds familiar? Reminiscent of the GST (Goods and Services Tax) it replaces, SST has been a source of frustration amongst some Malaysians.

When MYR10 doesn’t mean MYR10

Do you know what it feels like to be short-changed? Case in point: you’re a prepaid mobile user and you purchase a MYR10 top-up. You get MYR9.43 after a 6% SST deduction. Now, imagine a data package costs MYR10. Because you’re now MYR0.57 short, you’ll need to make an additional top-up to make up for the deficit.

Not cool, is it?

Since 1 September when SST officially came into effect, mobile prepaid users have cried foul over the 6 percent tax on top-ups. Local telcos have diligently followed the directive from the Royal Malaysian Customs Department that SST is imposed on prepaid reloads, similar to postpaid and broadband services.

SST Mobile Prepaid Lim Guan Eng
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Hello telcos, exempt SST on prepaid services or suffer my wrath.

Lim Guan Eng, the Finance Minister, however, has stated otherwise – that prepaid should be excluded from SST. The minister warned the country’s telcos to immediately stop charging the service tax or face ministerial intervention.

In an official statement today, the Ministry has stated that prepaid services provided to Malaysians must be exempted from SST. The exemption falls under Section 34(3)(a) of the Service Tax Act 2018. This will be enforced starting 6 September 2018.

Pengecualian Cukai Perkhidmatan Ke Atas Perkhidmatan Telekomunikasi Pra Bayar.

Posted by Kementerian Kewangan Malaysia on Tuesday, September 4, 2018

SoyaCincau reports that there will not be any refund for tax collected between 1-5 September as this monies is directed to the Government as part of SST implementation. Consumers who have topped up will be given freebies in the form of free minutes or data.

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In a nutshell, SST is taxed at the source, or first level, whereas GST is at multiple levels of the supply chain. SST effectively, should result in cheaper goods compared to the now defunct GST. The list of SST-taxable items is also smaller.

According to the guide by the Royal Malaysian Customs Department, goods like mobile phones and notebook PCs are subject to 5 percent SST, while other items like digital cameras, DSLRs, headphones and watches are imposed 10%. Depending on the type of goods, SST can range from 5 percent up to 25 percent.

Some smartphone companies like OnePlus, OPPO and vivo have chosen to absorb SST to maintain prices for consumers.

One must wonder why the new government has committed the same mistake with SST as the previous government did GST implementation. Putting mobile prepaid services on the tax exempt list should have been done from the start.

Oversight or communication breakdown?

Now that it’s official, let’s hope all goes smoothly with SST implementation from this point on.

What are your thoughts? Leave your comments below.

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