There are 2 important things to understand about GST:
1) It replaces Sales and Service Tax (SST). SST will be abolished.
2) It does not necessarily make things more expensive for you.
GST is a tax on value-added activities at every level in a supply chain, with the ultimate consumer bearing GST. All intermediaries in the supply chain (i.e. the manufacturer, the distributor) simply facilitate with the imposition and collection of GST.
Basically the government wants to make sure everyone contributes to paying taxes. The old system only applies to specified services and GST will now apply to all services unless exempted or zero rated.
There’s been some misunderstanding about whether the introduction of GST will make things more expensive. We’re not tax experts but theoretically GST shouldn’t increase prices you pay Kaodim contractors or any other service providers.
In fact, Service Tax is currently 6% and GST will also commence at a flat rate of 6%. So theoretically you shouldn’t be paying any more tax once GST is introduced.
This diagram attempts to explain why GST shouldn’t make the cost of contracting or renovation more expensive. If contractors indiscriminately increase their prices and tell you that it’s because of GST then this may be a breach of the Anti Profiteering Act.
There you go. But if you want to get into more detail (we don’t), there’s a whole lot of complicated material out there you can read. Like the Goods and Services Tax Guide on the Construction Industry by the Royal Malaysian Customs:
We did this for 5 years as lawyers so we’re going to take a break from it now.
Kaodim delivers up to 5 quotations from different renovation contractors or handymen whenever you put in a request for a home improvement job. You can compare their prices and speak to them to find out for yourselves if you think there has been any indiscriminate increase in their prices on the pretext of GST. Use our in built messaging system or just what’s app them!
Kaodim empowers you with all the information you need to make the best hiring decision. Make the best of it.