You’ve probably heard of SST. But while you’re almost certainly familiar with those three letters, you might not know what it actually means for your electricity bill. This changing tax system won’t impact electricity costs for all consumers, but it will for some, and it’s important to understand how and why.
Sales and Service Tax (SST) was brought in to replace the Goods and Service Tax (GST). GST was a tax that applied to the final consumption of goods or services. What that meant was that at every stage of the purchasing journey for certain goods, a tax would apply. SST operates a little differently, and understanding the basics is a great way to understanding how it might impact your electricity bill.
The Sales Tax and Service Tax
Although SST is often referred to as one tax, it’s actually a Sales Tax and Service Tax in parallel. This isn’t a new tax in Malaysia, and in reality, is just a reintroduction of a similar SST system to the one that GST replaced. These two taxes went into force on the 1 September 2018, so how do they actually work?
- Service Tax is a tax charged and levied against relevant services as a single stage tax. It is charged at a rate of 6%.
- Sales Tax is a single tax applied to importers and manufacturers of relevant goods. It varies between 5%-10% and is collected from manufacturers and importers.
Is electricity impacted by SST?
Yes, residential electricity falls under the Service Tax Act 2018, making it a taxable service under the new SST legislation. As a registered taxable entity, Tenaga Nasional Berhad (TNB) is liable to a 6% tax under the new SST. This only applies to residential consumption, and not to industrial or commercial uses.
This will only apply to consumers whose monthly consumption exceeds 600 kWh
The good news is that this will only apply to consumers whose monthly consumption exceeds 600 kWh. That’s a higher rate than the previous GST, which zero-rated electricity consumption only up to 300 kWh. So under SST you have a zero-rated consumption twice as much as you would have done under GST.
So if your consumption is below 600 kWh within a minimum 28 day period, the 6% additional tax will not apply to you.
How can I reduce my electricity usage?
If you’re worried that your consumption might be nudging over the 600 kWh level, there are a number of ways you can work to reduce your energy use in order to avoid that additional 6% tax.
Did you know that over 70% of energy use in the home is down to air conditioning and refrigeration? Simple steps like closing windows when your air conditioning is running, regularly cleaning your air con filters, and making purchasing decisions guided by 5-Star energy ratings, all help add up to a more efficient use of electricity at home.
It’s not just staying cool that offers some cool ways to save. Changing to energy efficient LED light bulbs, putting outside lights on sensors or timers, or just reducing the temperature you run your washing cycle, all help contribute to reduced electricity consumption.
Energy consumers have never been better informed about their own electricity consumption. TNB’s Home Energy Report gives consumers the power to make smarter energy choices. The growing digital adoption and accelerating roll out of TNB’s smart meter programme will present even more opportunities to understand and manage energy consumption in the future. The more information you have, the better prepared you are to understand and reduce electricity consumption.
Will I know how much tax I’ve paid and where does it go?
The Service Tax is just like it implies – a tax. That means taxes collected aren’t collected for profit, all funds go to the Royal Malaysian Customs Department.
Consumers who find themselves over the 600 kWh threshold, and are subject to SST, will see the full amount charged clearly on their bill. This tax will not apply to any street lights attached to your account, and it won’t be further imposed on late charges or the renewable energy KWTBB surcharge.
If you want to find out more about SST, the Royal Malaysian Customs Department has a detailed guide to the reintroduced taxes, how they apply, and what that might mean for you. TNB customers can also find a helpful FAQ on the utility’s website.