good and services tax

7/29/2019 Good and Services Tax

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GOOD AND

SERVICES

TAX
http://1.bp.blogspot.com/-N8cu2NTBhuo/TZ6SB29dkNI/AAAAAAAAAW4/9FM1yBL6uLY/s1600/171209_GST_GST.jpg


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INTRODUCTION


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WHAT IS GST?

consumption tax based on the value-added concept.

imposed on goods and services at everyproduction and distribution stage in thesupply chain.

The proposed GST will replace the currentsales tax and service tax


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IMPLEMENTION


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Why does the government wantto implement GST ?

To enhance the capability, effectiveness andtransparency of tax administration and

management.When will the government

implement GST?

The Government has not determined theimplementation date of GST in Malaysia.

Presently, the Government is actively involved inproviding awareness and knowledge on theconcept and rules regarding GST implementation.


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RATES


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RATE OF GST THAT WILL BE

IMPOSED:

The social and pricing impact studies

conducted by the Ministry of Finance indicated

that the suitable GST rate is in the range of 4%.


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GST RATES IN ASIA PACIFIC

http://malaysiafinance.blogspot.com/2010/03/malaysias-gst-must.html


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Why a GST rate which is lowerthan the current tax rate?

To neutralize GST impact on the consumersso as not to unduly burden the consumers

especially the lower income group.

It is expected that the consumers will benefitfrom the price reduction in most of the

goods and services.


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COMPARISON


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REASON SST REPLACE BY GST GST is a more comprehensive, effective, transparent,

and business friendly tax system.

GST can overcome the various weaknesses inherent in

the present consumption tax system.

GST is expected to increase tax compliance and iseasier to administer in view of its self policing method.

The businesses are required only to submit simplified

tax returns based on prescribed formats.

All records and documents relating to the relevanttransaction are required to be kept in the businesspremises for audit by the GST auditor.


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CONCEPT


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THE GST CONCEPT

GST is charged and collected on alltaxable goods and services produced in

the country including imports.

Only businesses registered under GST cancharge and collect GST


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THE GST CONCEPT

Supplier of rawmaterials/services

Supplier offinishedtaxable

good/services

Consumer /End User

GST

(output tax)

GST

(input tax)

i. GST collected on output (output tax) is deductedagainst the GST paid on input (input tax).

ii. If there is excess, the amount shall be remitted to thegovernment within the stipulated period.

iii. If there is deficit, businesses can claim for refund from thegovernment.


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SUBJECT OF GST


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GOODS AND SERVICESSUBJECT TO GST

In principle, GST is imposed on all goods andservices produced in the country including

imports.

Certain basic foodstuff likes rice, sugar, flour,cooking oil, vegetable, fish and meat, eggsand essential services such as health and

private education, public transportation,residential property and agricultural land arenot subject to GST.


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BUSINESSES SUBJECT TO GST

Only businesses with annual sales turnoverof RM500,000 and above are liable to be

registered under GST.

Businesses having an annual salesturnover of less than this amount are notliable to be registered under the GST.

However, such businesses can apply forvoluntary registration.


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WHY IS THE THRESHOLD FIXEDAT RM500,000

The annual threshold is fixed at RM500,000 toensure that the small businesses are GST-free andare not required to bear the costs of registration(start-up cost and compliance cost) under theGST.

Based on studies, it is estimated that about 78% ofthe total business establishments will not fall withinthe GST system. As such the consumers has thechoice of making their purchases of basic needsfrom the businesses which do not charge the GST.Indirectly, the consumers


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THE CALCULATION OF THETHRESHOLD :

Method 1

Calculation based on the sales records forthe preceding 12 months.

Method 2Calculation based on the estimated sales

for the next 12 months.


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ADMINISTER


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ADMINISTERS OF THE GST

The government has decided that the

Royal Malaysian Customs Department(RMC) manages and administers the GST to

be implemented in Malaysia.


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The e-poll is put up by Royal

Malaysian Customs at itsofficial website :

http://www.nbc.com.my/blog/do-you-agree-that-gst-should-be-implemented-in-malaysia/
http://www.nbc.com.my/blog/do-you-agree-that-gst-should-be-implemented-in-malaysia/


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Reasons support for GST:

Increase national/government revenue and mitigate theheavy reliance on income tax and petroleum tax, in whichincome taxes contributed 44.4% of government revenue in2010.

Tax burden will not increase when income level increased.

Everyone will pay tax and tax burden is spread over, insteadof just relying on income taxes derived from 15% of the workingpopulation.

Overcome the loopholes of current sales and services taxsystems.

Eliminate over-lapping tax at different stages, as GST isgenerally charged on the consumption of goods and servicesat every stage of the supply chain, with the tax burdenultimately borne by the end consumer.

More stable for government revenue with GST as a

consumption tax based, compared to direct income taxes andminimise the impact of economic cycles, particularly duringrecessions.

Corporate tax and individual tax rates could be reduced.

Minimise the occurrences of tax evasions.


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Reasons disagree with GST:

May result in inflation as general products pricesmay go up.

Increase the tax burden on low income workinggroup (the other 85% as described item 3 above)

The government may possibly increase the GSTrate from 4% to 15% to increase revenue.

Worry that the GST tax may even higher thancurrent sales tax 10% and service tax 5%.

Worry that the effect of tax revenue re-distributionmay not be achieved


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BENEFITS


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BENEFITS FOR BUSINESS The GST is not a cost to business as the GST paid on

the business inputs can be claimed as tax credit.

The cost of doing business will decrease by anamount of RM4.3 billion inclusive of a saving ofRM1.4 billion by exporters on their business inputs.

Local products and services more competitive inthe domestic and international markets.

Improve tax compliance and is easier to

administer due to its self-policing feature. Bureaucracy in the governments delivery system

will be significantly reduced.


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BENEFITS FOR CONSUMERS Based on a GST rate of 4%, it is expected that

there will be a price reduction between 0.08% to2.71% in respect of eight components of goods

and services.

The cheaper goods and services such as clothingand footwear, basic food, communication,furnishings, hardware and maintenance, transport,housing, water, electricity, gas and fuel.

The tax burden is expected to be lowercompared with that under the present tax system.


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CONCLUSION


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Is the government implementGST?

The government is ready to implementGST at any time.

Government machinery such as theMinistry of Finance, the CustomsDepartment, the Ministry of DomesticTrade, Co-operatives and Consumerism

has taken steps to prepare therequirements for the GST implementation

good and services tax

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