How will SST impact prices? 5 things consumers should know


Woman hand paying on line with credit card

© Antonio Guillem | 123rf

In June 2018, the new government announced their plan to reintroduce the Sales and Services Tax (SST), which will come into effect on September 1, 2018. The SST will replace the Goods and Services Tax (GST), which has recently been set at 0%.

According to The Sun Daily, Finance Minister Lim Guan Eng said the SST will be set at the former rate of 10%, which was the same rate before GST took effect.

However, SST rates can be anywhere between 5% and 25% based on the previously imposed SST. Meanwhile, various industries are still waiting for more information on implementing SST.

For example, the prices of hotel rooms and services will depend on whether or not the hotel industry needs to charge Service Tax as they did prior to GST, according to Malaysian Association of Hotels president Sam Cheah in a report by The Star.

There are also those who view the 10% SST rate as too high. Recently the Malaysian Retailers Association (MRA) has urged the government to set the rate for the upcoming SST at less than 6%, according to The Edge Markets.

So far, many experts are expecting prices of goods to be lower in general, though potential price hike is expected on some items, and also the charges or cost for services rendered if SST covers a wider range of services.

For example, the services rendered could be from a company to an individual, like professional services, or from a company to another company.

More information on the implementation of SST will be gradually announced by the government. In the meantime, there are a few things that you must know before SST kicks in.

Check out the 5 significant SST impacts you must know as a consumer:

1. Pricing for ride-hailing services may remain unchanged

In a recent press conference, Grab Malaysia Country Head Sean Goh said there won’t be much impact on its pricing once SST comes into force on September 1. “We do not have details on the impact of SST yet. Currently, we do not expect pricing to really change. What we are trying to do is try to displace as much of the cost in the system as possible,” he told reporters after signing a memorandum.

2. Selected consumer goods may see a price drop

© 123rf

In an interview with StarBiz, expert tax consultant Yong Min Jie mentioned that the sales tax is based on the manufacturing cost or import cost and if the sales tax was based on the earlier tax rate of up to 10%, then the prices of goods would come down.

When SST was around previously, consumer goods such as movie or concert tickets, electronic gadgets (e.g. digital cameras, laptops, mobile phones), skincare products, cosmetics, and clothing were untaxed.

It’s expected that the prices of these items would decrease, now that GST is no more.

“For consumer items such as food and beverage and retail, we can expect prices to be slightly lower around 3%,” AmBank Group chief economist Anthony Dass told The Star.

3. Slightly cheaper prices for new homes on the cards

Good news for aspiring homeowners! When it comes to property prices, new houses are expected to see a slightly cheaper price.

Our Finance Minister, Lim Guan Eng announced on 10 August, that building materials and construction services will be exempt from the Sales and Services Tax (SST) which will come into force in September. Previously, basic construction materials including bricks, cement and sand as well as construction services were subjected to 6% GST. 

Some of the building materials that will not be subjected to SST are cement, sand and iron. 

4. Car prices expected to increase


If you’ve been planning to buy a car, you’ll be well-advised to make the purchase before the SST comes into force. Car prices are expected to increase and be higher than the GST price by approximately 2% to 3%.

“Before GST was implemented, SST was 10%. If we consider this figure, we expect the prices of vehicles to increase, post-SST. This is an easy estimate if the rate is the same,” Malaysian Automotive Association (MAA) president Datuk Aishah Ahmad said in a report by NST.

Similarly, prices for car-related products and car services (e.g. repairs, maintenances) would potentially increase too following the 10% rate.

5. Prices for electrical appliances may also go up

Male hand pushing switch

© loganban | 123rf

Prices of some grocery items and household items, such as furniture and electrical appliances (e.g. air-conditioners, refrigerators, televisions) are also expected to increase following the 10% rate.

Prices of health services like body massages and spa sessions may also cost you more due to the Service Tax component of SST.

Also, bad news for booze lovers and ciggie addicts — during the previous SST implementation, liquor was taxed at 20% and cigarettes at 25%! If the new government decides to impose the same rate, there will definitely be an increase in prices. So far, the price of cigarettes remains unchanged even without GST.

“There will not be any decrease in price. That is our commitment to ensure that the prohibitive price is going to be one of the ways to prevent the use of cigarettes,” the new Minister of Health, Dr. Dzulkefly Ahmad, said in a report by The Star.

4 Smart ways to enjoy the rare tax holiday

For the first time in 40 years, Malaysians are currently enjoying a rare tax holiday for a period of three months. We recommend you to do a few things before SST starts on September 1:

Switch to better mobile plans or deals – Pricing for telco products and services have been revised following the 0% GST. Switch to a mobile plan or deal with better value

Replace old household items – As furniture and electrical appliances are expected to be more expensive, now is the perfect time to replace the old ones. If possible, get the energy-saving electrical appliances or recycled furniture for further saving

Service your car – Take advantage of the zero tax now to do repair or maintenance on your car before SST starts

Buy a new car if you’ve been planning to – Car prices dropped significantly following the 0% GST. If you’ve been dreaming about owning one, do it as soon as possible.

Before you set out to make purchases…

A credit card may come in handy in boosting your savings while you set out to make grocery purchases or to buy something bigger, like an A.C. or refrigerator, before SST kicks in. Here’s why:

● There are many credit cards that give cashback on grocery spends. That said, always consider the minimum spend requirements to avail the desired cashback before choosing a particular card. Here are some of the top cashback credit cards in Malaysia
● You can also break down your bigger purchases made with credit cards into monthly instalments at low or zero instalment charges

Related Stories

This article was originally published as How Will SST Impact Prices? 5 Things Consumers Should Know by and is written by Dayana Sobri. 

Sign up and stay updated
Get the latest property news, home solution tips, interior design ideas and property guides.
By subscribing, you consent to receive direct marketing from Malaysia Sdn Bhd (iProperty), its group of companies and partners. You also accept iProperty’s Terms of Use and Privacy Policy including its collection, use, disclosure, processing, storage and handling of your personal information.