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Yesterday’s tabling of Price range 2024 proposed for the present service tax price of 6 % to be elevated to eight %. The scope of the brand new service tax can even be expanded to incorporate logistics, which means that the price to move completed vehicles and automotive components shall be increased subsequent yr.
Particulars on efficient implementation date, or pointers for automobile workshops are nonetheless missing so we should await a separate announcement from Customs. The usage of the time period service tax can be inflicting a little bit of a confusion to most of the people, as most Malaysians discuss with gross sales and providers tax as a single, unified SST merchandise.
Primarily based on current SST pointers by Customs, it’s fairly clear that many workshops should improve their costs in 2024 to make up for the upper tax. Absolutely, we are able to’t anticipate the federal government to take away what’s already listed as a taxable service.
The present SST (6 % price) pointers by Customs says –
Efficient 1st September 2018, any one who:
- Operates a motorcar service centre
- Operates a motorcar restore centre
- Supplies motorcar service providers
- Supplies motorcar restore providers
is topic to service tax underneath Merchandise 5, column (1), Group I, First Schedule, Service Tax Laws 2018. Nevertheless, solely workshops with turnover of greater than RM 500,000 are taxable.
Taxable providers embrace (however not restricted to):
- Restore and engine tuning service
- Change, modify and set up spare components service
- Balancing and alignment providers
- Physique restore, knocking and welding providers
- Provision of Pre-Supply Inspection (PDI) providers by a motorcar
- The cementing and repainting providers
- Providers on the trailer and tanker
- Reimbursement on prescribed service by third social gathering (i.e. when workshop A outsources job to workshop B)
A workshop that’s at the moment charging, say for instance, RM 120 for labour to finish an oil change has so as to add RM 7.41 in service tax. Below the brand new 8 % price, the determine is now RM 9.60. It’s a small improve however keep in mind that we haven’t issue within the elevated transportation price for automotive components.
The present SST pointers exempt automobile wash, towing, and auto detailing providers (sharpening and waxing) from service tax, however it’s nonetheless unclear if it will stay within the revised 2024 SST pointers.
The gross sales tax for spare components stays at 6 %. With two completely different charges – 6 % for components and eight % for labour (providers) – workshop homeowners can even have to do some changes to their accounting software program.
For automobile firms that at the moment supply 3-year or 5-year free service to their clients, the primary activity on Monday morning is to crunch some numbers to find out if they will nonetheless afford to supply the identical privileges to their clients.
For some firms like Bermaz Auto, which affords a really all inclusive 5-year free service that features components, labour and lubricants for Mazda (besides BT-50) and Peugeot fashions, the price impression will add up fairly considerably.
Others whose ‘free service’ affords are restricted solely to labour, may even see much less impression to their backside line.
None of those ‘free’ providers are ever free. All the things has already been costed into the automobile’s promoting worth, so the query is whether or not underneath the brand new 8 % price, can they nonetheless preserve the present promoting worth of their vehicles?
Since Price range 2024 was introduced on late Friday, many automobile firms nonetheless don’t have a solution relating to the impression on costs of their automobile components and repair packages, however it’s secure to say that automobile upkeep price will creep up additional subsequent yr, and that is growing throughout the context of world inflationary pressures and our weak Ringgit pushing up costs of consumable components like tyres, wipers, and 12V batteries.
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