DOMESTIC POWER TARIFF UP TO 600 KWH, WATER BILL NOT SUBJECT TO SERVICE TAX -- TREASURY SEC-GEN

KUALA LUMPUR, Feb 28 (Bernama) -- Over 85 per cent of domestic users whose monthly electricity consumption is 600 kilowatts per hour (kWh) and below will continue to enjoy zero service tax on their power bills, says Treasury Secretary-General Datuk Johan Mahmood Merican.

He said only domestic households who consume more than 600 kWh of electricity a month will be affected by the eight per cent service tax hike that came into force on March 1, 2024.

"We did not change the goalposts for those who are subject to the service tax; we just wanted to clarify that currently, the (six per cent) service tax has been imposed on this segment (over 600 kWh a month consumption), which is rather a small segment, " he told an editors briefing here today.

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Johan Mahmood said commercial and industrial electricity consumers will also not be charged for the service tax, as they are not subject to the tax all this while.

Similarly, the service tax will not be imposed on the water bill, he added.

The government is slated to raise the service tax to eight per cent from March 1, 2024, from six per cent currently.

However, the increase will not include services such as food and beverage (F&B), telecommunications, parking space and logistic services that include delivery of goods.

Asked if physiotherapy under the Allied Health Professions Act 2016 (Act 774) could enjoy the service tax exemption like the traditional and complementary medicine (TCM) practitioners who are registered under the T&CM Act 2016 (Act 775), Johan Mahmood said the government is still reviewing the matter.

"We try to achieve some consistency on treatment for similar types of services, but we have not finalised the review yet," he said.

According to Johan Mahmood, the two per cent service tax hike is expected to bring the government an additional RM3 billion in revenue next year. 

Responding to a question on whether the government would consider reimplementing the goods and services tax (GST) to increase its coffers, Johan Mahmood said that currently, it is not the right time to bring back the consumption tax.

"The government will continue (the efforts) to reduce the fiscal deficit by introducing gradual measures that, on the one hand, could increase the government's revenue and, on the other hand, mitigate the impact on the rakyat and businesses," he said.

Concerning the high-value goods tax (HVGT), also known as luxury tax previously, Johan Mahmood said the government is still working through the details and will make an announcement in due course.

Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim, when tabling the Budget 2024 in October last year, said that the government will draft new legislation to implement HVGT at a rate of five to 10 per cent on certain high-value items such as jewellery and watches, based on the threshold value of the goods.

According to the Finance Ministry, the tax is expected to be implemented from May 1, 2024.

--BERNAMA