MOF: 10% service tax not by government

Leven Woon

| December 7, 2013

According to MOF restaurant operators collect the 10% service tax to give to their waiters.

KUALA LUMPUR: A disgruntled MCA grassroot leader wants the government to compel fast food chains to scrap the practice of imposing the 10% services charge, saying that such fees is unreasonable.

“They are already charging 10% service charge, once the 6% goods and services tax is in place, they will charge 16% everytime we order a burger or chicken.

“But where are the services? We are the one carrying our food and taking our chili,” lamented former Sungai Assam assemblyman Ho Cheng Wang during the question-and-answer session at a MCA-held GST forum today.

But the Finance Ministry (MOF) said that they had no authority to do so.

MOF GST project official Ezleezan Othman said the 10% service charge imposed by fast food chains “is not” government tax and is collected by the restaurant operator to be given to their waiters.

He said consumers who refused to pay the tax should negotiate with the fast food chain.

But Ho was not convinced by Ezleezan’s reply and instead asked further: “You tell me under what law they can collect service charge? Which section?”

“You should ask them to remove the service charge, because the GST is going to drive the price up.”

“And if they can remove their service charge, people will be happy with the government,” added Ho.

‘Service’ is not govt tax

MOF’s GST advisor Kamariah Hussain then stepped in and said restaurateurs have long been imposing the service charge, and that this ‘tax’ should be lumped together with the GST subject discussed.

“Setting aside the service charge, previously the government imposes 6% sales tax, after that it is still 6% GST, so there is no change from the government side,” she said.

The forum moderator, MCA central committee member Chua Tee Yong then said the ‘service tax’ matter should be addressed by the domestic trade department.

FMT however understands that the major fast food outlets such as KFC and McDonalds do not collect 10% service charge.

Only certain franchise restaurants such as Nando’s and Pizza Hut observe the practice.

Meanwhile, Chua also urged the government to raise the threshold for electricity exemption from GST from the current first 200 kilowatt per hour to 300 kilowatt per hour.

He said this is in line with the announcement that residential users who consume less than 300 kWh of electricity every month would not see an increase in their bill.

“By raising the threshold this would encompass 70% of the users and benefit some 4 million people,” he said.

Admin: The title should be "Service Charge" and not "Service Tax". I think the writer is confuse.