19 Nov Tax ain’t a new concept
Lately the tax system has been confusing. So we’re going to break down what tax is and how to pay it. We’ll also go through the items that are taxable and the revised SST in the future. So stick around 😉
Definition: Tax , noun
amount of money you pay to the government that is based on your income or the cost of goods or services you have bought.
(Cambridge Dictionary)
A tax was first visible around 6,000 BC in Ancient Mesopotamia. Mesopotamians would tax goods and property.
The proceeds would then fund trade with other cities and keep the city safe. The tax amount was small, except during times of conflict and hardship.
The same concept applies today, although in Malaysia we have had two kinds of tax: SST and GST.
Unlike some countries, the tax is not included in the price of an item from a food and beverage place in Malaysia. This tax will only apply to F&B businesses who earn RM 1.5 million in yearly income or more.
The abolishment of GST in June made room for the reintroduction of SST in September.
where does my 💵 go?
The Malay government collects the tax you pay. A New Straits Times reporter said, “the government [had] collected RM 44 billion from GST in 2017”.
Now, you must be asking yourself “Where does all this money go?”
The tax money is then distributed back to people and funding for various projects. The money pays for public services and to take care of children, seniors and unemployed.
The government funds highways, traffic lights and signs, police, military and public hospitals.
The SST in Malaysia is currently set at 10% for sales and 6% for services, and this may seem high, but there is a good reason.
The tax systems also allow the government to control Malaysia’s consumption of resources. Yet, essentials such as fruits, vegetables, and healthcare are not subject to SST.
steps to paying tax 💰
The 2 common ways to pay tax are the ‘one-time’ and ‘recurring’ taxes.
SST is a one-time only tax. This tax is on the bill or transfer document and it is clear so you know you are paying tax.
A recurring tax like Property Assessment Tax, Quit Rent, Income Tax can be charged at different times.
You will receive the bill for these taxes at different times. Hence there being 4 main ways of paying them.
- Pay/file taxes online through official websites of relevant government bodies or participating banks
- Pay over the counter at the relevant government office or participating bank
- Pay through ATM or cash and cheque deposit machines
- If overseas, make a telegraphic transfer or send a bank draft to the relevant address.
Know you know how to pay your taxes, it is still essential to know when you are expecting tax and to know the best way to pay for it. In the upcoming articles, we will review different kinds of tax, what is on the SST list and eligibility for tax.
Summary
At the end of the day, all you need to know is that tax goes back to the welfare of the people. Tax funds society and makes certain services available to the wider community.
check out this smartfinance.my vid
What Is Tax? from SmartFinance on Vimeo.
If you are still struggling with tax or would like to learn more about finance, sign up to https://smartfinance.my/ today!
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References:
New Straits Times
https://www.nst.com.my/news/nation/2018/01/328375/customs-department-collects-rm44bil-gst-2017-najib
GST vs SST: What’s the difference?
https://www.comparehero.my/blog/gst-vs-sst-whats-the-difference
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