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The F&B Owner's Guide to SST in Malaysia

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The F&B Owner's Guide to SST in Malaysia

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What is SST? Do I have to pay it?

SST stands for Sales and Service Tax and it has come into effect since 1st September, replacing GST in Malaysia.

Sales tax is levied on imported and locally manufactured goods at a rate of 5-10%, and the government collects tax at the manufacturer’s level only.

Service tax is imposed by businesses in the hospitality industry and is fixed at a rate of 6%, but only eateries earning RM1.5 million and above yearly are subject to SST. This includes restaurants, coffee shops and other eateries like mamak outlets. 

The Service Tax license with the name , address and the license number has to be displayed prominently in the licensed premises.

 

How do I register for service tax? 

Register online through the MySST system. You will be notified of registration or in the absence of a notification, you may need to apply individually online using MySST system.

Accounting for sales and service tax

Service tax is required to be accounted when payment is received, or if full payment is not received, on the day following 12 months from the date of the invoice for the taxable service provided.

Submitting service tax returns and payment

The service tax collected by your business is paid to the government once every two months.

Your service tax return has to be declared every two months according to the taxable period, and submitted no later than the last day of the following month after the taxable period ended. You can do this electronically or by post to SST Processing Centre. 

Service tax return has to be submitted regardless of whether there is any tax to be paid or not.

Late payment penalty:

▪ 10% - first 30 days period. 

▪ 15% - second 30 days period 

▪ 15% - third 30 days period 

▪ Maximum penalty 40% after 90 days

 

Service tax ≠  Service charge

While service tax is paid to the government, service charge is distributed among the service crew, in place of a tip system.

Service charge can range from 5 - 10%. Service tax is not imposed on the service charge but on the cost of goods or services provided.


 

If you are SST registered, here are some ambiguous conditions to take note of.

 

1. if your restaurant’s premises includes parking facilities and you charge for parking, it is subject to service tax.

2. For events:

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- If waiter services are part of the event package, they are also subject to service tax. 

- If you collect deposits in advance (e.g. the deposit for an event in December was received in October 2018, considering the bi-monthly taxable period is October and November), you should account for the service tax not later than the last day of the month following the end of each taxable period (i.e. December 2018).

 

3. Vending machines

All sales through any vending machines owned by F&B operator is subject to service tax. Service tax is to be accounted as inclusive of the sales value.

 

4. Coupons/ vouchers

Coupon/ voucher purchased online and redeemed at the F&B operator is subject to service tax. The coupon/ voucher value shall be accounted for by F&B operator. The value to impose service tax is the value of actual price.

 

5. Rental of space

Rental of space on the F&B’s premises is considered as one of the services provided by the service provider. Hence, it is subject to service tax.

 

6. Retail at your F&B premises

Non-food merchandise such as stationery, newspaper, toys, and etc are not subject to service tax. Neither are titbits and snacks such as sweets, ice cream, banana chips and etc. 

 

7. Reservations

If your restaurant takes deposits for reservations, service tax is payable upon payment received, so deposits for reservation are subject to service tax.

8. Rental of small stalls

SST tax exemption is given to rental of small stalls within a shop’s compound to food and beverages shop operators.

9. Sales of cigarettes

There is an SST exemption on the sales of cigarettes in food and beverages shops with threshold value of less than RM500,000.

 

You may want to adjust your menu pricing

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Under the Sales Tax Bill 2018, 5,443 goods are exempted from SST, compared to 545 goods under GST.

Customs Department has uploaded a list of proposed sales tax rates for various goods, and depending on the tax rate, your restaurant’s food costs might go up.

Common ingredients such as grains like rice, wheat and quinoa, most meats (chicken, duck, beef, mutton, pork) except rabbit and camel and most live fish are exempt from sales tax.

Other seafood, however, is a different story – many items like lobster, prawn, crab, mussels and scallops whether live or smoked/ dried are subject to 10% sales tax. 

 

Cheryl Tay is the editor and content marketer at iCHEF Singapore. She also manages iCHEF Club, a growing community of F&B owners in Singapore – organising events, the blog, an online newsletter and the F&B Entrepreneur Bootcamp, the only regular workshop on opening a new restaurant in the country. In her spare time, she attempts to read every book that’s ever won a literary prize and watches cat videos. Like any proper Singaporean, her love for food runs deep – especially spicy food. Chili is life. 

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New F&B Owner FAQ: How many foreign workers can I hire?

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New F&B Owner FAQ: How many foreign workers can I hire?

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New F&B owner FAQ: How many foreign workers can I hire?

 

Your foreign worker quota can be confusing because there are different permits and levies, depending on nationality and skill level. 

First, it depends on the number of full-time local employees you have (the quota is a percentage of the number of local workers you hire). 

Second, you have to pay a monthly levy for each foreign worker employed, and this levy is tiered. 

Which levy tier depends on the number of foreign workers you have in employment – the closer you are to the maximum quota, the higher the levy.

So what combinations of local and foreign workers will be enough for your manpower needs? 

 

Before we begin, some basics you need to know

 


1. Types of work passes/ permits available

Employment pass: For professionals, managers, and executives. Candidates must earn at least $3,600 a month. No quota/ levy.

S Pass: For mid-level skilled staff. Candidates need to earn at least $2,200 a month.

Work permit: No minimum qualifying salary. Valid for up to 2 years.

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Dependant’s Pass: For spouse or unmarried children under 21 years of eligible Employment Pass to S Pass holders. 

Dependants of Employment Pass holders can get a Letter of Consent to work in Singapore if they find a job here.

Dependants of S Pass holders will need to apply for a Work Permit, S Pass or Employment Pass instead. They will have to meet the eligibility criteria for these passes.

 

2. Levy (Tiered)

As long as you employ work permit holders, you will have to pay the levy, which starts from the day the Temporary Work Permit or Work Permit is issued, whichever is earlier.

The levy payment is via GIRO and will be deducted on the 17th of the following month. 

If you don’t pay the full levy on time, you may face the following penalties:

  • You will be charged a late payment penalty of 2% per month or $20, whichever is higher, for late payment.
  • Your existing Work Permits will be cancelled.
  • You won’t be allowed to apply for or issue Work Permits, or renew existing Work Permits.
  • You may face legal action to recover the unpaid levy.
  • If you, your partners or directors head other companies, these companies will not be allowed to apply for Work Permits.

Read about levy waivers here http://www.mom.gov.sg/passes-and-permits/work-permit-for-foreign-worker/foreign-worker-levy/apply-for-levy-waiver

 

3. The levy for higher skilled workers is cheaper 

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4. Non-Malaysian work permit holders require a security bond

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You need to buy a security bond of $5,000 before the worker arrives in Singapore.

The bond is in the form of a banker’s or insurance guarantee to support the security bond.

It will be forfeited if you violate conditions such as failing to pay salaries on time, failing to send employee back when work permits are expired or revoked, or if your worker goes missing.

 

5. The foreign worker quota  (based on the number of local employees)

Your foreign worker quota is calculated based on the latest 3-month average number of local employees in your company. Use the foreign quota calculator to find out how many you can employ.

Any late or non-payment of CPF contributions will affect your quota and may cause your workers to be allocated higher levy tiers.

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  • Local full-time employees are defined as Singaporeans or PRs under a contract of service with a minimum salary of $1,100/ month. 2 local part-time employees (earning $550 - $1,099/ month) count as 1 full-time employee.
  • The company director is considered a full-time employee if he/ she earns at least $1,100.

Business owners of sole proprietorships or partnerships and employees who receive CPF contributions from three or more employers are not counted when calculating your foreign worker quota.

 

6. For newly set up companies

If you haven’t made any CPF contributions yet, your quota for first month will be calculated based on your first CPF contribution, instead of the normal 3-month average.

 

Examples of F&B setups

and the number of foreign workers you can employ

 

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Kiosk/ cafe with no seating, takeaway only

No. of employees needed: 3 (2 in the outlet on any given day)

Breakdown: 1 local full time employee, 1 work permit holder (Levy = Tier 3, $800/mth), 1 PT

 

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Small cafe with seating (no hot kitchen)

No. of employees needed: 5 (min. 3 in the outlet on any given day)

Breakdown: 2 local FT, 1 work permit holder (Levy = Tier 2, $600/month), 2 PT (equivalent to 1 FT local)

 

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Small restaurant/ bistro

No. of employees needed: 4 BOH (3 cooks, 1 dishwasher) + 4 FOH

Breakdown: 3 local FT, 2 work permit (Levy = 1x Tier 2 + 1x Tier 3 = $1400), 3 PT (equivalent to 1.5 local FT)

 

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Full-service restaurant

No. of employees needed: 6 BOH (4 cooks, 2 dishwashers) + 6 FOH 

Breakdown: 6 local FT, 4 work permit (Levy: 1x Tier 1 + 1x Tier 2 + 2x Tier 3 = $2650) , 2 PT

 

7. Working hours

Employees are not allowed to work more than 12 hours per day.

Off days: You must provide at least 1 rest day per week. If the rest day is not a Sunday, you should prepare a monthly roster and inform your employee of the rest days before the start of each month. The maximum interval allowed between 2 rest days is 12 days.

 

Cheryl Tay is the editor and marketer at iCHEF Singapore. She also manages iCHEF Club, a growing community of F&B owners in Singapore – organising events, the blog, an online newsletter and the F&B Entrepreneur Bootcamp, the only regular workshop on opening a new restaurant in the country. In her spare time, she attempts to read every book that’s ever won a literary prize and watches cat videos. Like any proper Singaporean, her love for food runs deep – especially spicy food. Chili is life. 


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