PETALING JAYA: The Muslim Restaurant Owners Association has alleged that the criterion used in determining whether a restaurant must collect service tax is causing confusion among customers.
Customers are wondering why one restaurant collects the tax while another that has the same ambience and serves the same fare does not, according to the association’s president, Ayub Khan.
The difference would become especially stark if the two restaurants were located in the same area, he told FMT.
Under the sales and services tax (SST) regime, a restaurant must collect service tax of 6% if it earns RM1.5 million or more a year. The threshold amount works out to an income of RM4,109 a day.
Ayub also said the criterion used was unfair to some restaurants.
He painted a scenario of two restaurants in the same block of buildings, one earning an income just above threshold and another just below it. He said most customers would naturally prefer eating at the place where they wouldn’t have to pay tax.
“Chances are the restaurant that charges the tax will lose significant business,” he added.
He referred to most restaurants that come under his association as “street eateries” and called for their exemption from SST.
Alternatively, he said, the threshold amount should be increased to RM3 million.
Ayub claimed that most people patronising his association’s restaurants were from the B40 group and said charging them SST defeated the purpose of making their life easier by abolishing the goods and services tax.
“People are looking for a better life from the Pakatan Harapan government,” he said. “With SST, everything is back to square one again.”
He also said the SST might result in price increases in supplies for restaurants and such increases would eventually be passed on to consumers.
Paul Selvaraj, the CEO of the Federation of Malaysian Consumers Associations, also commented on the introduction of the SST, saying consumers were concerned that the prices of essential goods, especially cooked food, would go up.
“There should be strict enforcement to ensure traders do not make excessive profits,” he said.
He urged consumers to report price hikes to the authorities.