PUTRAJAYA: The number of consumer goods to be exempted from the sales tax is 10 times the number of goods that were exempted from the now-repealed Goods and Services Tax (GST).
A total of 5,443 consumer items have been exempted from the sales tax that is set at 5% or 10%.
Only 545 consumer items were exempted from GST when it was introduced in 2015.
Customs Department deputy director-general Datuk Seri Subromaniam Tholasy revealed the list of items that would be exempted from the Sales and Services Tax (SST) during a briefing with the media on Thursday (Aug 30).
Private hospitals and domestic flights, except for rural air services, will not be taxed either.
Still to be taxed are electrical appliances like washing machines and radios, personal items like shampoo and shower gel, as well as processed foods like fruit juice and butter.
Subromaniam also revealed that the number of service tax-applicable businesses is 43.49% compared to 65.85% of services that were GST-applicable.
“There were 472,000 business that were registered with GST, but we expect only 80,000 businesses to register with SST,” he said.
“About 85% of businesses will be out of the tax net,” he said, adding that this would help reduce prices as small manufacturers, cottage industries and small retailers will not be burdened by taxation.
Subromaniam said the compliance cost for businesses that are SST taxable is also lower, thus further lowering their prices.
“There are no refund mechanisms … . Unlike GST, they do not have to purchase special accounting software, conduct staff training or appoint GST consultants to manage their accounts,” he said.
Subromaniam said that GST was a complicated taxation system for businesses to manage as there were 36 tax codes for different items.
“The government has taken into consideration the people’s well-being. The tax collection from SST will be halved (from GST’s collection of RM40bil to SST’s expected collection of RM21bil), but our objective is to reduce the cost of living,” he said.