Goods and Services Tax (GST)

Goods and Services Tax (GST) is a consumption tax imposed on the sale of goods and services. In some countries it is also called Value Added Tax (VAT). Personal end-users of products and services cannot recover GST on purchases.

 

The key challenges to the Government in implementation of a goods and services tax (GST) in Malaysia are: 

• Balancing the conflict between the need to make it simple and to cater for social needs.
• The more social needs are catered for, the more complex the tax becomes and
• The more complex the tax becomes, the more costly it is for the Government to administer and for businesses to comply with it. 

The International Monetary Fund (IMF) has long recommended the introduction of GST as a way of raising the efficiency of the Malaysian tax system. Malaysia plans to introduce a four per cent goods and services tax in 2011, replacing current sales and services tax in a bid to diversify national revenues.

 

The Malaysian government felt the introduction of GST would provide the government with the opportunity to reduce corporate and individual income tax rates.

 

 

The government is expected to earn Ringgit Malaysia (RM) 1 billion ($410 million) in the first year of the GST implementation. GST covers all types of goods & services sold to Malaysian & non-Malaysian residents (therefore consumers) except for common commodities such as rice, flour & sugar.

 

Highlights of the Proposed GST

• Implementation will be a slow & steady tax process, not until middle to late 2011 or 2012, so that individuals and small businesses will not be adversely affected.
• It will replace the 10+5% services and goods tax. This means taxes are lower now, Consumers need not pay more for one area, but it's divided into many other source of 'tax' payments.
• Government's income will increase. This will enable further development and budget control to the country, other than relying just on petroleum or income tax revenues.
• It's a broad-based tax system. Some items may be slightly more expensive & cheaper. It's not an overall standardized taxation method.

 

 -sumber

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