Our new Pakatan Harapan Government recently reduced GST from 6% to 0% from 1 June 2018 as part of their manifesto that was announced before GE14. The new Sales and Service Tax (SST) which will be reintroduced in September 2018 marks the end of the GST that was implemented for three years in Malaysia.
During these three months from June to August, it is considered the consumption tax free holiday for the market and the pricing of most goods are expected to be lower compared to the GST times. However, there are some cases that happened with some complains from consumers that certain businesses are charging even higher with 0% compared to during GST. These complains went viral on social media on the first few days of June 2018.
The benefits of 0% GST, which resulted in lower prices, are supposed to be passed on to consumers as a whole. To ensure businesses do not take advantage through price manipulation to earn unreasonably high profits, the Price Control and Anti-Profiteering Act 2011 becomes an important enforcement tool for the authority.
The Price Control and Anti-Profiteering Act was Gazetted in 2011 to eliminate price manipulation when GST was implemented in April 2015.
The Act provides the power to the Minister of Domestic Trade, Co-operative and Consumerism to determine a mechanism that ascertain a particular business making unreasonably high profit. The mechanism is applied using calculations and comparisons of pricing pre and post GST implementation. The regulations apply to all level of businesses and all types of goods and services.
In 2017, the Regulation Price Control and Anti-Profiteering (Mechanism to Determine Unreasonably High Profit for Goods) 2016 which was brought into force only covered two types of goods that are Food and Beverage and Household Products which includes personal care products but excludes cosmetics. This Regulation did not apply to services.
However, with GST being reduced to 0%, the authority has been Gazette on 5 June 2018 which is the Price Control and Anti-Profiteering (Mechanism to Determine Unreasonably High Profit for Goods) 2018. The Regulation is effective 6 June 2018 and covers all types of goods and services.
If a business is found to be making unreasonably high profit and, if the business owner is an individual, the fine for first offence can be no more than RM100,000 or imprisonment of not more than three years or both. For the second offence, the fine can be no more than RM250,000 or imprisonment of not more than five years or both.
If the business owner is a corporate, the fine for first offence is not more than RM500,000 and for second offence is not more than RM1,000,000.
In 2015 when the GST was implemented, there were some business owners charged in Court for committing offences.
Businesses are advised to beware of the Act when adjusting prices and when SST is re-introduced there will be another round of pricing adjustment in the market. The consequences not only results in monetary fines, it will damage the reputation of business if court action is taken against them.
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