Gst in Malaysia

Goods and Services Tax (GST) GST is a consumption revenue enhancement based on the value-added judgment. GST is imposed on goods and go at every production and distribution stage in the make out chain including importation of goods and services. The GST implementation is part of the governance activitys task reform program to enhance the capability, effectiveness and transparency of levy system and management. The political relation has not determined the implementation date of GST in Malaysia. Presently, the Government is actively involved in providing awareness and knowledge on the concept and rules regarding GST implementation.If GST is implemented, the Government pass on forget ample time between 18 to 24 months for the craftes and industries to prepare themselves for the implementation of GST. At the moment, the government has not strict the GST rate to be imposed in Malaysia. Nevertheless, the social and pricing electrical shock studies conducted by the Ministry of Finance indicated that the suitable GST rate is in the range of 4%. GST is a more comprehensive, effective, transparent, and business friendly tax system. GST can thrash the divers(a) weaknesses subjective in the present consumption tax system.The inherent weaknesses chthonic the present tax system are the cascading tax, double tax and pyramiding tax, tax erosion and leakages by means of transfer pricing and another(prenominal) means. Besides that, GST is evaluate to increase tax residency and is easier to administer in view of its self policing method. Besides that, the businesses are required only to postpone simplified tax returns based on prescribed formats. All records and documents relating to the pertinent transaction are required to be kept in the business premises for audit by the GST auditor.How does GST work? GST is charged and collected on all taxable goods and services produced in the country including imports. Only businesses registered under GST can charg e and collect GST. GST collected on output mustiness be remitted to the government. However, businesses are allowed to claim the input tax credit through the following mechanism and method- i. GST collected on output (output tax) is deducted against the GST paying(a) on input (input tax). ii. If there is excess, the come shall be remitted to the government within the stipulated period. ii. If there is deficit, businesses can claim for refund from the government. GST can only be collected by persons who are registered under GST and the tax shall be remitted to the government within the stipulated period. In principle, the GST is not a cost to business as the GST paid on the business inputs can be claimed as tax credit. As such, it is estimated that the cost of doing business will decrease by an amount of RM4. 3 gazillion inclusive of a saving of RM1. 4 billion by exporters on their business inputs.The reduction in the business cost will make the local products and services more competitive in the domestic and international markets. In addition, the GST is expected to improve tax compliance and is easier to administer due to its self-policing feature. With GST, bureaucracy in the governments pitch shot system will be significantly reduced. Based on a GST rate of 4%, it is expected that there will be a price reduction between 0. 08% to 2. 71% in respect of eighter components of goods and services.With this price reduction, the rakyat will benefit from the cheaper goods and services such as robes and footwear, basic food, communication, furnishings, hardware and maintenance, transport, housing, water, electricity, gas and fuel. The tax burden borne by the rakyat and consumers is expected to be lower compared with that under the present tax system. This is due to the fence that various basic needs such as rice, sugar, flour, cooking oil, vegetables, fish, meat, eggs, and inborn services such as public transport, private bringing up and health, residentia l properties and agricultural land are not subject to GST.What are the measures undertaken by the government to ensure a smooth GST implementation? The government will give the businesses ample time to be ready for GST implementation. GST awareness and education programmes will be conducted on an on-going basis until the GST is implemented. In its effort to mete out GST information to the general public, the government has set up a usage call centre which will be available at Kelana Jaya, Selangor.In addition, various industry guides will be issued as guidance to the industries relating to the GST treatment and procedures pertaining to circumstantial industries. The Customs Department will conduct visits to business premises to provide assistance and advisory services to ensure that businesses fully understand the GST rules and procedure. The government will also ensure that the GST computerization system is fully operational before the GST implementation. The test run for the p ilot project relating to the early fitting process will be conducted six months before the GST implementation date.