Why is 4As Malaysia seeking SST exemption on advertising services?

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4As Malaysia Seeks SST Exemption on Advertising Services to Mitigate Economic Impact

The Association of Accredited Advertising Agents Malaysia (4As Malaysia) is requesting an exemption from the Sales and Service Tax (SST) on advertising services to support its members during a period of economic volatility. This measure is proposed as a crucial step to aid in economic recovery, encourage increased advertising budgets, and prevent significant job losses and business closures within the industry. The association has outlined ten specific measures for government consideration, with the SST waiver being a primary focus.
Impact of Economic Downturn on Advertising Spending

In the four months preceding the proposal, businesses in the advertising sector operated at significantly reduced capacity, with some temporarily suspending operations. This challenging environment led many advertisers to cancel or reschedule campaigns and drastically reduce their budgets. These cuts were often redirected to cover essential operational costs such as employee salaries and accumulated debts, highlighting the severe financial strain on advertisers.
Projected Decline in Advertising Expenditure and Revenue

The direct consequence of these economic pressures has been a notable decrease in advertising spending. For the first five months of 2020, advertising expenditure saw a decline of 20 per cent. Revenue streams across the industry experienced a further reduction, ranging between 20 per cent and 50 per cent. Projections indicated a continued year-on-year drop of 20 per cent in advertising spending by the end of 2020, with overall revenues expected to stagnate.
Industry-Wide Reductions and Layoffs

The financial repercussions have extended to the workforce and operational structures of creative and media agencies, as well as some media owners. It is estimated that pay cuts ranging from 10 per cent to 30 per cent have been implemented. Furthermore, an estimated five per cent to 10 per cent of employees have already been laid off. Without improvement in business conditions, an additional 20 per cent of industry members are anticipated to downsize their operations or face closure.

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Why is 4As Malaysia seeking SST exemption on advertising services?

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