Thursday, 16 August 2018

Return of SST: Analysis of the new sales tax mechanism

By S. Saravana Kumar and Jason Tan

This article was first published in the Malay Mail website on 20 July 2018.

Malaysians are now so used to the term “SST,” as it has dominated headlines over the past few weeks. During a debate session in Parliament on July 18, 2018, the finance minister stated that on a full-year scale, SST collection will be RM21 billion, which is almost half of that collected from GST in 2017.

After much intense speculation in respect of the scope and mechanism of SST, the Royal Malaysian Customs Department (Customs) finally shed light on this matter by publishing a draft on July 19 (Proposed Mechanism). It turns out that the Proposed Mechanism mirrors that of the SST regime pre-April 2015.

In essence, although coined as SST, both sales tax and services tax are actually governed and charged independently by separate legislations, and therefore, the term could be misleading.

Although both are single-layer consumption-based taxes, one of the major differences is that sales tax operates on a negative list, where all goods manufactured or imported to Malaysia are taxable unless exempted.

On the contrary, services tax operates on a positive list, where only the specific and exhaustive list of services are taxable. This article focuses on the issues concerning sales tax.

Wednesday, 8 August 2018

Sales and Services Tax (SST) Mechanism

The article was written by TraTax, a firm of independent tax advisors ranked within Top 10 in Malaysia for transactional taxation. The article was first published in TraTax's e-Alert on 19th July 2018.


As stated in our previous e-Alert, Malaysia has announced that Sales and Services Tax ("SST") would be implemented effective 1st September 2018. Today, the key information on the mechanics of SST has been revealed by the Government. In this e-Alert, we analyse the information, and make recommendations on actions that businesses should take.

Diagram One: Evolution of
consumption taxes in Malaysia
As an introduction, SST is a single-tier tax system that replaces the multi-tier Goods and Services Tax (“GST”) that was imposed at 6 percent until 31st May 2018. An overview of the history pattern on the SST-GST-SST is depicted in Diagram One.
In general, the design of the 2018 SST is broadly similar to the characteristics of the SST repealed on 31st March 2015. SST comprises Sales Tax and Services Tax, both of which are single-tier taxation – i.e. taxed only at a single point in the supply chain.

Sales tax applies on goods. If goods are manufactured locally, sales tax is generally 10 percent of the factory price. If goods are imported from outside Malaysia, sales tax is generally imposed at 10 percent of the value of goods (plus Customs' duties) at the point of importation. Some (limited) goods are subject to 5 percent sales tax, rather than 10 percent.

Services tax generally applies at 6 percent on prescribed services. At this juncture, it has been announced that the following services would be subject to the 6% service tax:

  • Hotel (including service apartment and homestay)
  • Insurance and Takaful (all B2B and certain B2C)
  • Service of food and beverage preparation (restaurant, hawkers, catering, etc.)
  • Club (night club, golf club, etc.)
  • Gaming, (casino, gaming machines, lottery, etc.)
  • Telecommunication
  • Pay-TV
  • Forwarding agents
  • Legal
  • Accounting
  • Surveying
  • Architectural
  • Surveying
  • Valuer
  • Engineering
  • Employment agency
  • Security
  • Management services
  • Parking
  • Motor vehicle service or repair
  • Courier
  • Hire and drive car
  • Advertising
  • Domestic flight (except for rural air services in East Malaysia)
  • IT services
  • Electricity.

Tuesday, 7 August 2018

What Happens to Employees in a Business Closure?

Authors: Donovan Cheah (Partner) and Amirul Izzat Hasri (Associate) (Donovan & Ho)

The latest in the legal drama involving Chatime and Tealive saw the Federal Court allowing Tealive to stay open pending their leave to appeal to the Federal Court. If Tealive ultimately loses its battle at the apex court, they will have to cease current operations; if they wish to continue operating they will have to have a business that does not compete with Chatime.

The most obvious question that then pops up in everyone’s mind is: “What happens to the Tealive employees?”

Thursday, 2 August 2018

Companies cautious in hiring HR

Author: Nurhuda Syed

This story originally appeared

Singapore companies remain cautious about hiring highly skilled HR professionals, even as its counterparts in the Asia Pacific region report varying demands. 
Despite MOM’s strong hiring outlook in 2018, Singapore’s job market for HR roles remains stagnant and only saw a mere 2% increase in hiring as compared to 2017. This after seeing no increase or decrease in job postings for HR in the first quarter.
The Philippines however continues to exhibit strong demand for HR professionals with up to 30% increase in hiring in the second quarter of 2018, according to latest figures from Monster Employment Index.

Thursday, 26 July 2018

Proposed Sales and Service Tax ("SST") Implementation Framework

by Wong & Partners (Member firm of Baker & McKenzie International)

This article was first published in Wong & Partners’ Client Alert dated 23 July 2018.

On 16 July 2018, the Minister of Finance announced that SST will be introduced with effect from 1 September 2018. Following the announcement, the Royal Malaysian Customs Department ("RMCD") has published the following details[1] on the implementation framework for the SST regime on 19 July 2018:

(a) Proposed Sales Tax Implementation Model;
(b) Frequently Asked Questions (FAQ) - Sales Tax 2018;
(c) Proposed Service Tax Implementation Model; and
(d) Frequently Asked Questions (FAQ) - Service Tax 2018, 

(collectively referred to as "RMCD Guidance").

This alert provides a general overview of the scope of the proposed SST regime, including details on exempted supplies and registration thresholds, as set out in the RMCD Guidance. Kindly note that the final SST framework is subject to the legislation that will be tabled before Parliament and published in the Federal Gazette.

What HR needs to know about Modern Slavery legislation?

Authors: Aaron Goonrey and Coral Yopp (Lander & Rogers)
This article was originally published in Lexology.
Slavery is a real issue in Australia, and new legislation designed to tackle it will affect a surprising number of businesses. Here’s a breakdown of how.
You look at the clock and it’s 6:00 pm, you’re supposed to be at your mother-in-law’s birthday dinner in half an hour but your boss wants that report, the one you’ve barely started, on her desk first-thing tomorrow morning. You have no choice but to make the call – “Sorry, I won’t be able to make it to dinner…the boss has me chained to the desk“.

Putting aside whether you’re secretly glad to be missing your mother-in-law’s birthday dinner, we bet you’ve made the joke about being ‘chained to your desk’ or ‘trapped at work’, as if you were a slave. However, it might surprise you to know that slavery is a real issue in Australian workplaces.

Thursday, 19 July 2018

Protecting Personal Data: What Should Your Business Do?

Authors: Shawn Ho (Partner) and Ian Liew (Associate) (Donovan & Ho)

From Cambridge Analytica’s alleged hijacking of 87 million Facebook users’ data, to something even closer to home, being Lowyat’s news expose of local telco’s database of 46 million mobile phone numbers and Astro’s IPTV customer details being made available for sale online.

Apart from the scale of personal data leaks being jaw-dropping, this article examines the responsibilities and standards that Malaysia’s Personal Data Protection laws impose on businesses in Malaysia, both big and small, when it comes to protecting and securing customers’ personal data, and addresses some practical steps that are expected of such businesses to take.