Friday 29 Mar 2024
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This article first appeared in The Edge Financial Daily on August 1, 2018

KUALA LUMPUR: The federal government tabled the Sales Tax Bill 2018 and Services Tax Bill 2018 (SST Bills) for their first reading in Dewan Rakyat yesterday.

The draft laws seek to provide for the charging, levying and collecting of the sales and services tax, and for matters connected with it.

The Sales Tax Bill seeks to provide for the tax to be charged and levied on any taxable goods manufactured in Malaysia and sold, used or disposed of by a registered manufacturer, or taxable goods imported into Malaysia by any person.

In Section 3(1) of the Sales Tax Bill, the word “manufacture” is defined as “in relation to goods other than petroleum, the conversion by manual or mechanical means of organic or inorganic materials into a new product by changing the size, shape, composition, nature or quality of such materials and includes the assembly of parts into a piece of machinery or other products, but does not include the installation of machinery or equipment for the purpose of construction; and in relation to petroleum, any process of separation, purification, refining, conversion and blending”.

The bill proposes that the rate of the sales tax be determined by the finance minister, who is also empowered to vary or amend the rate.

Meanwhile, the Services Tax Bill seeks to provide for the tax to be charged and levied on any taxable services provided in Malaysia by a registered person in the course of carrying on a business.

The bill also seeks to empower the minister to prescribe any service to be a taxable service, as well as determine and amend the tax rate.

Putrajaya also tabled the Goods and Services Tax (Repeal) Bill 2018 to repeal the Goods and Services Tax Act 2014 (GST Act). Also tabled were two bills to amend the Free Zones Act 1990 and Customs Act 1967, which are consequential to the implementation of the SST Bills and repealing the GST Act.

Among the notable amendments to the Customs Act is increasing the penalty on the offence relating to a customs agent acting without approval, from a fine of not exceeding RM500, to imprisonment for not more than five years, or a fine of not more than RM100,000, or both.

The second reading of all the bills will be done in this Parliament sitting ending on Aug 16.

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