FREQUENTLY-ASKED QUESTIONS REGARDING THE ENFORCEMENT OF PROFITERING UNDER PRICE CONTROL AND ANTI-PROFITEERING (MECHANISM TO DETERMINE UNREASONABLY HIGH PROFIT FOR GOODS) REGULATIONS 2018
THE ROLE OF THE MINISTRY
1. What is the role of the Ministry in handling the issue of rising prices of goods and services in line with the implementation of Sales and Services Tax (SST)?
The role of the Ministry in the implementation of SST is handling the anti-profiteering activity and manipulation of price by irresponsible sellers as well as ensuring that the rising prices do not occur uncontrollably.
2. What are the enforcement measures taken by the Ministry upon the implementation of SST?
The Ministry through the Enforcement Division is enforcing the Price Control and Anti-Profiteering Act 2011 (AKHAP 2011) to handle the issue of sellers who take excessive profits on goods or services. The Enforcement Division implemented “Operasi Catut 5.0” through the enforcement operation on every chain of business which consists of manufacturing/importing/distributing, wholesaling and retailing sectors across the country whereby if the sellers do profiteering offense, action will be taken against him under the said Regulations.
REGULATIONS OF PROFITEERING
3. What is the meaning of profiteering sellers?
4. What are the regulations enforced by the Ministry to manage the profiteering sellers?
The regulations that are enforced to determine the unreasonably high profit for goods or services are AKHAP 2011 and Price Control and Anti-Profiteering (Mechanism to Determine Unreasonably High Profit for Goods) Regulations 2018.
5. Do these Regulations have expiration date?
6. Do these Regulations bring benefits to the consumers in handling the issue of prices of goods?
These Regulations are a controlled mechanism at the Ministry level in ensuring that the sellers do not take advantage against the consumers by taking excessive profits on goods and services as well as ensuring that the rising prices of goods or charges of services are implemented under control.
7. What are the factors that cause the rising prices of goods?
The ups and downs of the prices of the goods are influenced by the supply and demand factors. This supply and demand are then affected by factors such as adequate stock which in turn determine the costs of goods.
8. Is rising price an offence that can be taken into action at the Ministry level?
Rising price is not an offense yet. However it is the basis to an inspection in identifying whether there is a profiteering offence.
9. Are the sellers considered as profiteering if the selling price for the same goods can be sold at different prices in different premises?
No. Profiteering is determined according to the setting of prices and costs at that sellers’ own premise and are not compared with other premises.
10. What are the actions that can be taken by the Ministry if there is an increase in prices of goods or charges of services?
The Ministry will issue a notice under Section 21, AKHAP 2011 to the relevant sellers to obtain details on the information of the prices and costs of the goods or charges of the services.
11. What is the purpose of the notice being issued to the sellers?
The purpose of the notice being issued to the sellers is to obtain information on goods or services and for the purpose of providing analysis for profiteering offence.
12. What are the penalties imposed to the sellers who are doing profiteering offence?
The penalties imposed to the sellers who commit profiteering offence are as follows:
- Where such person is a body corporate, he is liable to a fine not exceeding RM500,000 and, for a second or subsequent offence, to a fine not exceeding RM1,000,000; or
- Where such person is not a body corporate, he is liable to a fine not exceeding RM100,000 or to imprisonment for a term not exceeding three (3) years or to both, and for a second or subsequent offence, to a fine not exceeding RM250,000 or to imprisonment for a term not exceeding five (5) years or to both.
13. Does the Ministry control the prices of the goods?
Yes. The Ministry controls the prices of the following goods through the enforcement of AKHAP 2011:
- Granulated and Coarse Refined White Sugar
- Liquid petroleum gas
- Petrol Ron 95
- Face mask
- Goods that are involved in specific Festive Season Price Control Scheme
14. What are the types of implementation of Skim Kawalan Harga Musim Perayaan (SKHMP) / Festive Season Price Control Scheme?
There are 6 types of SKHMP which are:
- SKHMP Chinese New Year
- SKHMP Hari Raya Puasa
- Kaamatan Festival
- SKHMP Gawai Day
- SKHMP Deepavali
- SKHMP Krismas
MARKING OF PRICE
15. What are the actions taken by the Ministry towards the sellers who do not display the price tag for the goods sold?
The Ministry enforced the Price Control (Indication of Price by Retailers) Order 1993 and Price Control and Anti-Profiteering (Fixed Business) Regulations 2017 whereby sellers who do not display the price tag can be taken into action under the Regulations.
16. What is the meaning of Dasar Harga Terangkum (DHT) / Single Pricing Policy?
DHT is an advertisement, quotation and display of final price that should be paid by the consumers to obtain goods or services. It should comprise of:
- All taxes, duties and government charges
- All other charges that are imposed on certain goods
17. What are the types of business included under DHT?
ISSUES RELATED TO TAX
18. Is the sales and service tax (SST) under the authority of KPDN?
No. It is under the authority of Royal Malaysian Customs Department and any inquiries regarding the implementation of the tax can be referred to the said party or by browsing their website mysst.customs.gov.my
19. Are the sellers allowed to impose sales tax on the price of goods sold to the consumers?
No. The sales tax refers to a single stage tax imposed at the level of the manufacturer or importer only, those who provide services and have registered with Royal Malaysian Customs Department (JKDM).
20. Are the sellers allowed to impose service tax on a charge for services offered to the consumers?
Only the sellers that attain certain threshold under Service Tax Act 2018 can impose service tax on the services offered.
21. Is the service charge referring to service tax?
No. Service charge refers to a charge on sellers for services offered whilst service tax refers to Service Tax Act 2018 that is under the authority of Royal Malaysian Customs Department.
22. Is the service charge imposed by the sellers to the consumers included in the taxable services?
23. Are the consumers allowed to obtain receipt of goods or services from the sellers and is there any regulation that protects the consumers if the sellers refuse to provide the receipt to the consumers?
Consumers can obtain the receipt from the sellers and the sellers who reluctant to provide the receipt after being asked by the consumers have committed an offence under Consumer Protection Act 1999.
24. Can a service charge and service tax be displayed on receipt?
Can. The content of the receipt (taxable invoice) must be in accordance with the regulation under Service Tax Act 2018.
25. What is the role of the consumers in ensuring that they are not easily manipulated by the sellers?
The consumers need to know their rights and responsibilities as consumers as well as being attentive to current information by equipping themselves with consumerism knowledge.
26. How can the consumers channel any complaints or inquiries at the level of KPDN?
The channels of complaints or inquiries that can be utilized by the consumers are as follows:
- Official portal of KPDN;
- E-mail to eaduan[at]kpdnhep.gov.my
- SMS to 15888 by typing “KPDNHEP ADUAN”;
- Whatsapp to KPDN to this line di talian 019-2794317;
- Smartphone Application – EzAdu KPDN;
- Social Media –KPDN Twitter and Facebook Page;
- Report/Walk-in to any nearest KPDN office; and
- Consumer Complaint Management Centre.
PROFITEERING REGULATIONS ON SELLERS
1. Does the exercise of this Regulations apply to all levels of business?
This Regulations applies to all levels of business namely manufacturer, importer, producer, distributer, wholesaler and retailer.
MECHANISM OF PROFITEERING
2. Does the Regulations set the certain amount of profit that should be gained by the sellers?
This Regulations does not set the profit that can be gained by the sellers on goods sold or services offered. This Regulations only put control on the sellers to ensure that they do not take excessive profits on each goods sold or services offered to the consumers through mark-up percentage mechanism (% MU) or margin percentage mechanism (% MG).
3. What is the meaning of mark-up percentage and margin percentage?
Mark-up percentage (%MU) is a profit rate percentage that is calculated based on the cost rate of goods or services borne by the sellers whilst margin percentage (%MG) is a profit rate percentage that is calculated based on the selling price of the goods or charge of the services.
4. What is the method in calculating the mark-up percentage and margin percentage?
|Mark-up Percentage (%MU)
|Margin Percentage (%MG)
|SP – C x 100
|SP – C x 100
|SP = Selling Price
|C = Cost
5. What are the costs to be taken into account for this Regulations?
The costs to be taken into account are the price paid for the acquisition or production of the goods or services, and costs incurred in selling the goods or services that are considered in determining the selling price of the goods or charge of the services. Business expenses cannot be deemed as costs.
6. If %MU/%MG gained by the sellers are high, is it considered as profiteering under this Regulations?
The high value of %MU/%MG should not be considered as profiteering. According to the Regulations, profiteering occurs when current %MU/%MG for goods sold or services offered exceeds %MU/%MG basis for the goods or services that have been determined on the first day of a particular financial year (FY) or calendar year (CY).
7. How can a seller be deemed as profiteering?
A seller is deemed as profiteering if the mark-up percentage (%MU) or margin percentage (%MG) for any date throughout the current year exceeds mark-up percentage or margin percentage basis that have been determined on the first day of a particular year.
8. Is it considered as an offence if the sellers increase price of the same goods in the same FY/CY?
The sellers can increase price of the same goods or charge of the same services in the same FY/CY. However, the current %MU/%MG shall not exceeds the %MU/%MG basis for the goods and services that have been determined on the first day of a particular FY/CY.
9. What is the meaning of %MU/%MG basis and how it is determined?
%MU/%MG (PA) basis is %MU/%MG for goods and services that refers to the maximum value of a profit percentage on goods and services that need to be determined by the sellers on the first day of a particular financial year (FY) or calendar year (CY) of a business.
10. How is the %MU/%MG basis be determined by the sellers?
The %MU/%MG basis is determined by the sellers through a formula prescribed in the regulation of profiteering mechanism.
11. What is the meaning of current %MU/%MG and how it is determined?
The current %MU (PB) and the current %MG (PC) are %MU/%MG of goods on the date the goods are sold at any date throughout a particular year. The calculation is as per example illustrated below:
On 15th July 2017, Item A is sold with the price of RM10 and cost to produce this item is RM5. The business Financial Year is 1st January and ends on 31st December each year, and the business has operated since 2002. Therefore, the calculation of current %MU/%MG for Product A on 15th July 2017 is as per below:
|Calculation of %MU (PB)
|Calculation of %MG (PC)
|PB (15 JULAI 2017) = RM10 – RM5 X100
|PC (15 JULAI 2017) =RM10 – RM5 X 100
12. Can %MU/%MG be set differently according to the location of the premise?
The sellers are allowed to set different %MU/%MG according to the location of the business premise if it involves different costs with condition that the current %MU/%MG does not exceed %MU/%MG basis.
13. Are the sellers allowed to increase current %MU/%MG exceeding the %MU/%MG basis seeing that the selling price of the goods is still low as compared to the market price?
The sellers are not allowed to increase the current %MU/%MG exceeding the %MU/%MG basis even though the selling price is lower than the market price as the profiteering determination is done based on the comparison between %MU/%MG basis with current %MU/%MG of the goods sold or offered for sale by a business and not the comparison of %MU/%MG between a business with another business.
14. How to determine %MU/%MG on the first day if sale is happening on that day?
The determination of %MU/%MG if sale is happening on the first day should take into account the selling price on the date right before sale is happening.
15. How to determine %MU/%MG on the first day if the sellers introduce new product with introductory price?
The determination of %MU/%MG if sellers introduce new product with introductory price on the first day should take into account the selling price right after the introductory price expires.
16. How to determine %MU/%MG on the first day if the sellers sell or offer for sale a product for the first time after the first day?
The determination of %MU/%MG if the sellers sell or offer for sale a product for the first time after the first day should take into account the selling price on the first time the goods are sold or offered for sale
17. How to determine %MU/%MG on the first day if the sellers sell the goods with price lower than cost (Loss Leader)?
The determination of %MU/%MG if the sellers sell the goods with price lower than cost (Loss Leader) on the first day should take into account the selling price on the date the goods started to be sold exceeding the cost.
18. How to determine %MU/%MG on the first day if the business is not operated on the first day of FY/CY?
The determination of %MU/%MG if the business is not operated on the first day of FY/CY should take into account the selling price on the first day the business started to operate.
19. Did the Ministry provide guidelines to the sellers regarding the exercise of this Regulations?
The Ministry has provided the Guideline on Mechanism to Determine the Unreasonably High Profit and can be accessed in Ministry’s website at www.kpdnhep.gov.my