GST. Where Are We?

By Massita Ahmad

KUALA LUMPUR, July 7 (Bernama) — The Goods and Services Tax, or GST, although not a new term, has been widely discussed by Malaysians when its proposed implementation was officially announced in October last year.

The GST will be implemented from April 1, 2015 at six per cent to replace the Sales Tax and Service Tax.

Prime Minister Datuk Seri Najib Tun Razak, who is also the Finance Minister, announced the implementation of the GST when tabling the 2014 Budget.

By August, it will leave Malaysians eight months to get ready for the GST.

However, the GST implementation will be at stake if the entire supply chain, from the manufacturers, distributors, retailers and the end-users, adopts a silent-ignorant attitude.

For instance, some important terminologies are also needed to be familiarised first — standard-rated, zero-rated and exempt supplies.

Stakeholders should find out which goods and services produced will be under the standard-rated, zero-rated or exempt supplies category and whether they are claimable or not.

In principle, the GST will be imposed on all goods and services produced in the country, including imports.

Certain basic foodstuffs, public transportation, land, funeral package, private health and education, financial services, highway toll and accommodation for 28 days, are not likely to be subjected to GST.

The current Sales Tax and Service Tax rates are at 10 per cent and six per cent respectively, thus, the stakeholders should find out how the GST would ‘treat’ them after April 1, 2015.

Seven Asean countries have implemented the tax.

Indonesia was the first, followed by the Philippines (1988), Thailand (1992), Singapore (1994), Vietnam (1999), Cambodia (1999) and Laos (2009).

Except for Singapore, which initially imposed three per cent, the six other countries started the tax at 10 per cent.

Eventually, the tax rate changed and now Singapore and Thailand charged seven per cent respectively.

The Philippines has the highest rate in Asean at 12 per cent and the rest at 10 per cent.

Globally, Norway, which implemented the GST in 1970, has the highest tax rate of 25 per cent currently, five per cent higher than the initial rate of 20 per cent, followed by Morocco and UK at 20 per cent.

About 160 countries globally have implemented the GST.

Obviously, Malaysia is a latecomer but it is introducing a much lower rate compared to most early birds, which came from the low middle-, upper middle-, and high-income countries.

The government in proposing the GST at a lower rate to neutralise the tax’s impact on the rakyat and consumers and not to burden the rakyat, especially the lower income group.

By imposing GST at a lower rate, it is expected that the consumers will benefit from the expected price reduction in most of the goods and services.

To get better understanding on the ‘ingredients’ of GST, Bernama, the national news agency, is organising a two-day conference at the DoubleTree by Hilton Kuala Lumpur Hotel with Tax Advisory and Management Services Sdn Bhd (TAMS).

The key speakers from specific industries, the Finance Ministry and the Royal Malaysian Customs Department would brief participants on the GST.

Pre-registration for the conference is required and can be done by calling the secretariat, Bernama Media Relations Event Management (MREM), at 03-2694-1024/3 or Nadrah Yusof 03-26962157 (nadrah.yusof@bernama.com) or Norhanim NoorHani 03-26962124 (norhanim@bernama.com).

— BERNAMA

GST. Where Are We?