Service Tax Up to 8%: Increased Service Tax For Electricity Will Affect Only 15% of Consumers

PETALING JAYA: About 85% of consumers nationwide will be exempted from the increased service tax for electricity bills, the finance ministry said.

In a statement, the ministry said the 8% service tax, an increase from the previous 6%, would only be applicable for usage above 600kWh.

Also exempted from the new rate is treated water supply services, it said.

“The government does not anticipate the changes to engender sharp price increases that would lead to an economic shock as the small two-percentage increase only affects selected taxable services.”

The SST rate is set to rise starting March 1.

The revised rates however would now also be imposed on selected services, including karaoke centres, the ministry said.

Meanwhile, the 6% rate will be retained for food and beverage, telecommunications, parking as well as logistics services.

The ministry assured that no tax would be imposed on food and beverage delivery services.

Second finance minister Amir Hamzah Azizan said the increased rates were designed to focus on discretionary activities and business-to-business services, while “protecting the rakyat from shouldering higher consumption tax”.

“To truly transform our economy, the government has taken a measured approach to reform our tax system.

“While it is important for the government to raise its revenue, there is a balancing act that we have to consider between improving the tax base and cushioning the rakyat from any undue burden.”

Amir said the ministry expected to make an additional RM3 billion in revenue from the revised tax rate.

This would help Putrajaya provide better social assistance schemes for the public and improve critical public infrastructure like healthcare, schools and roads.

He went on to say that it was necessary for the government to broaden the tax base to realign and strengthen the national fiscal foundation.

“At the same time, we will continue to take on a ‘whole of government’ approach to right our economic trajectory, including being more prudent in our spending, reducing leakages and attracting foreign direct investments.”

News sources: https://www.freemalaysiatoday.com/category/nation/2024/02/28/increased-service-tax-for-electricity-will-affect-only-15-of-consumers/