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How The “New” Sales and Service Tax In Malaysia Will Affect Singaporeans

Malaysia’s GST is technically not abolished, but made zero-rated.


The people of Malaysia woke up to a new dawn a few weeks ago, with a surprise victory by an opposition coalition at the Malaysia general election.

It might not have made as many headlines, but one of first things that the new government did was to announce a plan to reduce Goods and Services Tax (GST) from 6% to 0% on 1 June 2018, while introducing a “new” Sales and Services Tax (SST) regime at a later date.

It is important to note that the GST is technically not abolished, but made zero-rated.

SST was Malaysia’s tax system prior to GST’s implementation in 2015. If the government decides to retain the tax rates used in the previous SST, the two components of Sales Tax and Services Tax will remain at 10% and 6% respectively in the future.

In this article, we have summarised how consumers from Singapore will be affected when they shop in Malaysia both in the short and long term.

 # 1 Decrease In Prices During The “Tax Holiday”

In short term, prices are expected to drop during a “tax holiday” from 1 June till the implementation of SST regime. Since goods are taxed at 0% instead of 6%, they are cheaper and this will be a boost to both consumers’ buying sentiment, which should translate to better sales for businesses.

Eyeing a new camera or a new laptop? You can consider purchasing it in Malaysia since the prices would be even lower than before.

However, previously zero-rated GST goods would still be priced the same since they were already subjected to 0% GST. The list of zero-rated GST goods can be found here which consist of mainly essential foodstuffs and fresh produce, and will be elaborated on later on in this article.

As prices of construction materials and costs go down, property prices of new developments may drop slightly in proportion to how much the cost raw materials contribute to the selling price.

Read Also: 4 Reasons Why You Should NOT Be Investing In Overseas Property

# 2 Increase In Prices – Groceries, Baby Formula, Household Items, Car-Related Products And Sale of Residential Properties, Hotels

In the long term, the prospect of prices of current zero-rated GST goods remains to be seen.

If the government decides to introduce the same SST system that was used previously, the total tax burden will increase from 0% to 10% on these goods. Some notable zero-rated items include essential foodstuffs (oil, salt and rice), agricultural products such as fresh or chilled vegetables, meat and seafood. A total of 4,215 essential medicines, RON95 petrol and diesel and baby formula are also currently charged at zero-rate.

Read Also: Milk Powder Is Cheaper In Malaysia. Here’s Why

Of course, there is a possibility that the government would continue to exempt these goods from tax under the new tax system to ensure that lower and middle-income groups can afford them.

In addition to the goods mentioned above, we may see an increase in prices of household items such as electrical appliances (Televisions, refrigerators, air-conditioners, etc), furniture, as well as cars. These are goods that were previously taxed with 6% GST and may eventually be taxed up to 10% after SST is implemented.

With regards to servicing, maintenance and repair of cars, the increase from 6% to 10% will also cause repair fees charged to increase. Singaporeans fond of sending their cars across the causeway for servicing may want to do so before SST is implemented, for maximum savings.

Singaporeans who treasure weekend getaways or staycations in Malaysia will be disappointed to know that prices of hotels, serviced apartments, health services such as foot at body massage and spa are likely to increase due to the Service Tax component of SST.

# 3 Decrease In Prices – Clothing, Cosmetics and Skincare Products, Electronic Gadgets, Concert And Movie Tickets

On the flipside, our favourite and most sought-after goods such as clothing, cosmetics and skincare products, electronic gadgets (mobile phones, laptops, digital cameras) and concert and movie tickets were untaxed in the previous SST regime. Without GST, prices of these items would potentially decrease.

Understand How It Affects You As A Consumer

Is the journey across the causeway still worth it? No matter what you plan to buy in Malaysia, things are definitely cheaper decide now. We’ll all be eagerly watching how the SST will be implemented!

Read Also: How Much Does It Cost For Singapore Cars To Enter Malaysia? And Is It Worth Your Time (And Money)?

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