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:
- 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.
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
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.