MRCA urges government to reconsider 8pct SST on retail rents
KUALA LUMPUR: One of the country's largest retail groups, whose members employ over 400,000 people, has called on the government to consider a further review of the eight per cent Sales and Service Tax (SST) on commercial rentals.
This comes after the Finance Ministry announced an increase in the Service Tax registration threshold for commercial rentals from RM500,000 to RM1 million.
Malaysia Retail Chain Association (MRCA) vice-president Dr Afendi Dahlan said while they welcomed the revision, as it would help many micro, small and medium enterprises that fall within this range, there were concerns for other players.
He said businesses already faced higher overheads due to the rise in the minimum wage from RM1,500 to RM1,700, the rationalisation of diesel subsidies, higher electricity tariffs, e-invoicing and Employees Provident Fund contributions for foreign workers, among others.
Afendi said rental was among the key costs for any retailer, accounting for up to 20 per cent of total costs.
"Rent in a big mall can be more than RM50,000 a month and an eight per cent SST would amount to RM4,000 per outlet," he told the New Straits Times.
Afendi said MRCA represented 550 members who collectively operate 44,000 outlets.
"Some of our members have 200 outlets, so you can imagine how much the SST on rentals will cost them for all these outlets."
Afendi said while MRCA understood the government's desire to expand the tax base, the timing was not good for retailers, particularly since sales had dropped and other costs had risen.
He said MRCA was especially concerned for its struggling members.
MRCA, he said, hoped that the government would consider postponing the SST on rentals or reduce the rate to two per cent.
He added that MRCA, along with five other retail associations, had also proposed that the threshold be increased to RM2 million to ensure businesses remain sustainable.
Prime Minister Datuk Seri Anwar Ibrahim has said revenue from the SST will be used to improve schools, assist the poor and support public hospitals, among other initiatives. By Robin Augustin
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