KUALA LUMPUR (April 2): Manufacturing and construction sectors see adverse impact on their business from the reintroduction of the sales and service tax (SST) by the government, says the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM).

About 41.5% of the survey respondents stated the SST has adverse impact on their business, mostly in the manufacturing and construction sectors. This is despite SST exemption being granted to main building materials and construction services.

In contrast, 52% indicated SST has no impact on their business. These include wholesale and retail trade, professional, business services and real estate sectors.

This is based on the findings of ACCCIM's survey on the economic situation for the second half of 2018 and the forecasts for the first half of 2019, which gathered feedback from 1,027 respondents.

The government reintroduced SST on Sept 1 last year. The new tax regime replaces the goods and services tax (GST), which was introduced in 2015, and SST is touted as a friendlier tax system for the rakyat.

In a survey, about 54% of respondents indicated GST is the more preferred tax system than SST, particularly for the manufacturing sector as exports are zero-rated and the sector is eligible to claim input tax.

With the exception of the manufacturing sector and trading companies, small and medium enterprises (SMEs) in most other sectors rated SST as the preferred taxation system, as SST only imposes tax at single level compared to GST where tax was imposed at multiple levels, from manufacturers to wholesalers, retailers and consumers.