As the government prepares to re-introduce the Sales and Services Tax (SST) from 1 September, it is important for you to note that restaurants and hotels will continue to levy the 10% Service Charge
Essentially, the SST is a government tax, the Service Charge is NOT.
Imposed by hotels and restaurants, the Service Charge is what its name suggests: a charge for the service provided to you by the service crew of the eating establishments.
The hospitality industry is allowed to impose the Service Charge if there's an employer-employee collective agreement, and a notice on the charge is displayed.
The Service Charge is 10% of the total bill, of which the majority goes back to the staff.
The Service Charge is basically in place of a tip system
It is a norm to not tip at hotels and restaurants that impose the 10% Service Charge.
According to the Malaysian Association of Hotels (MAH) president Cheah Swee Hee, about 30% of hotels in Malaysia include the Service Charge in their bills, while the rest of the hotels implement clean wage system to meet the minimum wage requirement.
And because the Service Charge is not related to the services tax component of the SST, hoteliers have insisted it is here to stay
Earlier this week, in a report by The Star Online, an owner of a popular chain of restaurants in the Klang Valley said that even after the SST is re-introduced, they can still impose the 10% Service Charge. His sentiments were echoed by several restaurants in Penang, saying the collection is for the benefit of the workers.
"The Service Charge is also a form of motivation for the employees who do not earn much," the manager of Foong Wei Heong Restaurant was quoted as saying.