KUALA LUMPUR, July 17 — Deputy International Trade and Industry Minister Ong Kian Ming today stressed that the rate of the Sales and Services Tax (SST), which will come into effect on September 1 is not 16 per cent, as widely misconstrued.
Ong said the charges are 10 per cent and 6 per cent respectively and should not be added up as they are applicable to separate items.
“Sales tax will be applied at the manufacturing point while the services tax is only applicable for service providers.
“It is wrong to combine the rates and assume that it would be 16 per cent collectively,” he told reporters at the Dewan Rakyat lobby.
He said the confusion was not only among the public but also members of the Dewan Rakyat.
“There are also a lot of items that are affected by the Goods and Services Tax (GST) but exempted from SST. I think there is a little confusion of the scopes of these two taxes at the moment.
“To help everyone understand more, we will have a briefing soon to advise all MPs on matters related to SST and how it differs from GST,” he said.
The Bangi MP added that a simple look at the total tax collection under each system shows the benefit of swapping back to SST.
“The GST generated a revenue of about RM42 billion a year for the government.
“Under the SST, only RM21 billion will be collected. I think this will still be beneficial because it will be returned to the people,” he said.
Meanwhile Prime Minister Tun Dr Mahathir Mohamad said that the next item on the government's to-do list would be to ensure that the Parliament passes the law governing SST.
“We have already zerorised GST so now we have to ensure that Parliament repeals the law.
“As far as I know, the SST rate is 10 per cent if you make a purchase. If you don’t, you will not have to pay.
“Whereas GST is a tax at the source, so whether you buy or not, everything will go up in prices,” he said when met at the Dewan Rakyat banquet.