Confused by service charges, the previous sales and service tax and now the GST? You’re not alone. Many Malaysians had naively assumed that when GST came into force, the 10% service charge will automatically disappear from our receipt.
Back then before the GST implementation we are used to see prices on the menu board; “6 percent of government tax excluded.” When we make payment, on the receipt we can see the 6 percent government tax with service charge, and we were not really bothered by it.
Now, after the implementation of the Goods and Service Tax (GST) it is compulsory for traders to display the price with the 6 percent GST. However when we want to make payment we discover we still need to pay another 10 percent of service charge!
So what is this service charge all about?
It definitely doesn’t help when we get confusing signals from the authorities too. In March, Deputy Finance Minister Datuk Ahmad Maslan had publicly stated the contrary.
“The 10% service charge imposed by hotels and restaurants need not be paid after the goods and services tax (GST) is implemented,” the minister had publicly declared.
But the reality as most Malaysians found out is not only does the 10% service charge stay, GST is charged on the service charge amount as well in many cases!
Last week, as highlighted by Malaysian Digest, a Chinese restaurant in Bangsar Shopping Centre had placed a notice in front of the restaurant informing customers that there is a 6 percent GST on top of the 10 percent service charge and anyone not willing to pay that should not dine there. You can read the previous story on this link[More Heat On GST As Restaurant Refuses To Attend To Customers Who Don’t Pay Service Charge] .
The Secretary-General of the Ministry of Domestic Trade, Cooperative and Consumerism (KPDNKK) Datuk Seri Alias Ahmad had issued a public statement on the matter early this month
“It is the right of customers to decide not to pay service charges and there are no prescribed service charge rates,” he had stated publicly.
He clarified that restaurants and hotels without a collective agreement between employers and employees are not allowed to impose service charges.
So we are back to square one. Can Malaysians hope for a resolution to this form of hidden taxation?