Tuesday, July 22, 2008

Abolishment of 5% Service Tax

Our Malaysian's Royal Customs & Excise Department has announced that with effect from 1 July 2008, 93% of the Malaysian restaurants need not collect the 5% service tax from customers anymore.

During the weekend, I was at Hartamas Shopping Centre and took lunch at Station Kopitiam. After finishing lunch, the bill was called and I noticed the 5% service tax. Now, there are two items to note before you question their eligibility to collect the service tax:-

i) their annual turnover must be above RM3.0 million; and
ii) if the restaurant is located in a hotel premise, they are permitted to collect.

Imagine that during lunch period on a Saturday noon, only two tables were occupied. Your guess is as good as mine in terms on their annual turnover. So, I asked the waiter (all foreigners) and only one can speak good english. I reminded him about the non-collecton of service tax with effect from 1 July 2008. The waiter acknowledge that fact but can't change anything as his boss hasn't change the billing system set in the cash machine. Seriously, I couldn't blame them for that.

I asked how are we going to resolve this to which he requested me to call his boss. I said why should I call your boss and told him to resolve it with his boss. I told him I'm only paying the bill without the 5% service tax.

Later, he came over to my table and asked how much I'm going to pay. I repeated my words "The full bill minus the 5% service tax". I told him the issue is not whether I could afford to pay the service tax of RM1.88 but the principal behind it. I told him that businessowners were fast to implement any ways of collecting extras when government allows it but would turn a blind eye when told to remove or reduce it.

The waiter acknowledged again that he knew about the service tax issue and said during the weekdays, many questioned him. I don't know whether those who questioned did pay the service tax but definitely I'm putting my foot down.

Total bill was RM41.35 and service tax was RM1.88. I put RM40 into a tray and left the premise, telling the waiter that since he can't resolved it, I'm helping him to think. He can't do anything because they knew that they are in the wrong.

Oh yes, when I asked for a copy of the service tax licence issued by the Customs, he said he don't have it. Any restaurant is supposed to display that licence to show that they have been licensed to collect the service tax on behalf of the government.

Malaysians, please remember and do your part. Though your nice dinner may be ruined by the inconveniences in dealing with either the staff or restaurant owners, it is your right in not paying the service tax anymore. If you are too rich and don't bother with it ............... read this then ....


Related post - Service Tax Issue at Restaurants
Tags: Service Tax, 5% Service Tax, Hartamas Shopping Centre, Station Kopitiam, Royal Customs & Excise Department, Customs, Restaurant

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Blogger electronicfly said...

Serious one ah?

/me imagines all the money saved from not paying service charge.

but then would we have to start tipping?

22 July, 2008 20:59  
Anonymous Anonymous said...

how bout fast food? still got tax of 5% like mcD?

23 July, 2008 09:58  
Blogger Johnny Ong said...

electronicfly - in terms of tipping - u cld see the words "service charge". that's being paid to the restaurant for their services rendered, normally 10% of the bill. if u want to tip more than what u have paid under the service charge, its up to u.

cbenc - mcD certainly generates a an annual revenue of more than rm3.0m so they can charge u the 5% service tax

23 July, 2008 10:47  
Blogger electronicfly said...

but didn't you write that the 5% service tax is abolished? Or you meant the gov. tax?

23 July, 2008 19:30  
Blogger Johnny Ong said...

only 1 kind of tax. the other one is service charge imposed by the restaurant.

23 July, 2008 20:14  
Blogger Mangaranap said...

So McD can charge 5% service charge, I wonder what sort of service they have provided to customers? Free foot massage while you're queueing for Big Mac :-p?

Do you know if the money must be paid to the government or if they can pocket some of it?

24 July, 2008 18:18  
Blogger Johnny Ong said...

well, the govt has fixed the threshold and mcD do qualify to collect the service tax

as for who's really pocketing it, those bigger restaurants normally can't escape. only those small restaurants will take advantage. you'll never who qualifies actually and only way is to request for the licence.

25 July, 2008 01:46  
Anonymous Anonymous said...

Well said and well done on that info. Thanks dude.

31 July, 2008 14:25  
Blogger Johnny Ong said...

jendax - most welcome. citizen's arrest ..... hehe

01 August, 2008 04:52  
Blogger Wayne K. said...

I'm a Malaysian Taxation student. There's some clarification I need to make here.

Now, there are two items to note before you question their eligibility to collect the service tax:-

i) their annual turnover must be above RM3.0 million; and
ii) if the restaurant is located in a hotel premise, they are permitted to collect.

This statement is partially correct.
The eligibility to collect service tax are:

For restaurant inside a hotel more than 25 rooms,the restaurant is liable to collect service tax.

for restaurant outside hotel more than 25 rooms, the restaurant is liable to collect service tax if annual turnover exceeds RM3 mil.

The service tax is NOT abolished! Only the annual turnover threshold has been revised.

Service tax is imposed by the government, so it's untrue to say that the restaurant has not provide you foot massage, they shouldn't collect service tax.

check before making statements.
hope this clarify the doubts.

02 August, 2008 23:29  
Blogger Johnny Ong said...

mr wayne - really appreciate yr clarification. but b4 u tell someone to check b4 making statements, cld u pls check all my blog postings related to this 5%service tax

my reason for putting that abolish word was to catch ppl's attention and not to disseminate wrong info. by reading my blog posting it wld be clearer

03 August, 2008 01:27  
Blogger Wayne K. said...

lol.. it's not my motive to create a war here. pls forgive me if my comment brings you that impression.

first of all, the 'check be4 making statements', refer to the reply up here regarding foot massage in McD.

BTW, as you had mentioned, the 'abolish' word in the title would likely to confuse the reader, thus creating impression of 'service tax being abolished'.

I think readers shouldn't be expected to read all the posts,author brace the burden of giving consistent information.

my 2 cents.

03 August, 2008 01:37  

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