SUPP man urges traditional medicine exempted from service tax after dept demands arrears since 2018

Wong Ching Yong

KUCHING, Dec 31: Traditional medicine services, including Chinese medicine, should be exempted from service tax, similar to Western medicine, says Sarawak United Peoples’ Party (SUPP) Central assistant organising secretary Wong Ching Yong.

Wong commented on this after Malaysian Chinese Medical Association (MCMA) president Dr Heng Aik Teng confirmed that the Royal Malaysian Customs Department (RMCD) had allegedly sent a letter to traditional Chinese medicine practitioners sometime this month, demanding the payment of service tax arrears since 2018.

Describing the move as preposterous, Wong said RMCD has no legal basis to collect an indirect tax, namely sales and services, retrospectively unless the Department has sufficient evidence that there is fraud, wilful default and negligence on the taxpayer’s part.

He further opined that it is completely unacceptable and inappropriate to classify traditional Chinese medicine (TCM) in the same category as “night club, dance hall, cabaret, health and wellness centres, massage parlours, public houses and beer houses” because the Ministry of Health (MOH) accepts TCM and also provides such services in several government hospitals, with multiracial patients receiving TCM treatment in Malaysia.

According to Wong, based on the Sales and Service Tax Guide, pharmaceutical products are classified as exempt goods not subject to sales/service tax. Even fertilisers are listed in the exempt list.

“The bewilderment felt by traditional Chinese medicine practitioners can be easily imagined and understandable.

“To be categorised, without warning, by the RMCD as a service tax-paying industry and being retrospectively charged from 2018, is causing anguish,” Wong said in a statement today.

Wong, also the chairman of the SUPP Dudong branch, further explained that service tax is a form of value-added tax collected from customers when they settle bills for services or goods purchased, which is the point of sale.

If the tax is collected from customers after five years, he questioned how traditional healthcare providers can recover and collect the outstanding indirect taxes.

“Finding the customers is already a big challenge. Even if they can be located, do you think customers will be willing to pay the purported service tax dated 2018? The clients might view it as extortion.

“If members of the Malaysian Chinese Medical Association (MCMA) are unable to collect the outstanding indirect taxes from customers, do traditional healthcare providers like Chinese medicine practitioners need to foot the bill and pay off the tax arrears from the past five years out of their own pockets to avoid government actions?” he questioned.

Following the ordeal, Wong advised MCMA to consult tax experts and legal counsel to ascertain if such a directive from RMCD is legal and encouraged them to bring the matter to court for adjudication.

He also hoped that RMCD, MOH or the Ministry of Finance could clarify and rectify this issue to avoid widespread anxiety in the industry. — DayakDaily