Price Hike for Maintainence - with the SST rising from 6% to 8% on March 1 next year [2023-12-30]

In the Budget 2024 announcement, it was revealed that the current service tax rate of 6% will be raised to 8% starting next year, effective March 1, as per recent indications from the customs department.

Certain sectors such as food and beverage, telecommunication, provision of parking spaces, and logistics services are excluded from this increased rate. However, vehicle servicing and repairs do not fall within the exempted categories outlined in the revision.

Consequently, the upcoming 8% tax rate will be applicable to the labor charges for vehicle servicing, while the parts used during servicing will remain unaffected by the revised rate. This change is expected to lead to higher overall costs for vehicle servicing once the new rate comes into effect, as reported by The Star Newspaper.

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However, there has been no official confirmation about this, and the Federation of Motor and Credit Companies Association of Malaysia (FMCCAM) industry players has called on the government for clarity on the matter. 

Datuk Tony Khor, the president, highlighted that while the revised service tax rate wouldn't directly impact car prices, it would notably affect maintenance expenses. He expressed, "The new tax rate might be applicable to car workshops, pending government confirmation."

Moreover, he emphasized that any potential increase could significantly impact second-hand car owners with limited budgets. Khor acknowledged the possibility of rising maintenance costs but stressed the importance of ensuring vehicle safety and roadworthiness.

Khor mentioned that the association intends to request the government to consider exempting small workshops and individuals owning second-hand cars from the additional 2% service tax hike.

Datuk Koong Lin Loong, a tax expert, echoed Khor's sentiments, indicating that although car prices are unlikely to be impacted, owners might face increased expenses for maintenance if the new rate is implemented.

"Car prices are influenced solely by alterations in sales tax, import duty, excise duty, and approved permits. Nevertheless, car-related services, including repairs and maintenance, will encompass a labor charge subject to the additional 2% tax," he highlighted.

 


 

 

 

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