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Much of it stemmed from not issuing proper receipts and the lack of proper guidelines and understanding of how the tax actually works.

We look back at some of the hiccups that Malaysians faced since its implementation and the steps that have been taken to address them. Many Malaysians were confused between service tax and service charge during the initial stages of GST implementation. Many were under the impression that the advent of GST would eliminate service fees altogether, and were in a rude shock when they noted the item in their receipts.

First things first — service tax and service charge are not one and the same. Service tax is a form of tax collected by the service provider on behalf of the government this has been replaced by GST. Service charge, on the other hand, is a fee charged by the service provider for delivering services. Unlike the previous service tax, service charge does not go to the government.

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Instead, the amount collected from service tax is usually shared among the waiting staff at the end of every month. Consequently, the lack of understanding of the differences between the two had led to the next hiccup. One of the most prominent issues that cropped up following the implementation of GST was whether or not we still need to pay the service charge imposed by many hotels and restaurants.


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Meanwhile, restaurant and hotel owners argue that the removal of service charge would negatively impact the livelihood of their employees, who rely on collection of the fee to cover their daily living expenses. Amid the controversy, it has finally been announced in late April that the Government will allow businesses to continue implementing the service charge. PHP 6 1. PHP 3 4.

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