GST

Background

GST was scheduled to be implemented by the government during the third quarter of 2011,^[1] but the implementation was delayed until 1 April 2015. Its purpose is to replace the sales and service tax which has been used in the country for several decades. The government is seeking additional revenue to offset its budget deficit and reduce its dependence on revenue from Petronas, Malaysia's state-owned oil company. The 6% tax will replace a sales-and-service tax of between 5–15%.

The Goods and Services Tax Bill 2009 was tabled for its first reading at the Dewan Rakyat (the lower house of the Malaysian parliament) on 16 December 2009.^[4] It was delayed amid mounting criticism.The government responded by asserting that the tax on oil income will not be sustainable in the future. National Consumer Complaints Centre head Muhammad Sha’ani Abdullah has said, “The government should create more awareness on what the GST is. The public cannot be blamed for their lack of understanding, and thus, their fears”. Sha’ani says that the GST will improve accounting, reduce tax fraud, and facilitate enforcement of the upcoming Anti-Profiteering Act. Muslim Consumer Association of Malaysia leader Datuk Dr. Ma’amor Osman said the GST could help end dishonest business practices, but expressed concern about how the tax would be applied to medical products and services. A group leading the campaign against the GST, Protes (which objects to the GST because of concerns about its effects on low-income Malaysians), cancelled a planned protest but has stated that they will continue to agitate against the legislation.

During the government reading of the 2014 budget, Malaysian Prime Minister Najib Razak announced a GST tax of 6% starting on 1 April 2015. This will replace the Sales and Services Tax.^{[9][10][11][12]} Implementing GST tax will be a part of the Government’s tax reform program to enhance the capability, effectiveness and transparency of tax administration and management.The GST was implemented on 1 April 2015.

What is Advantages of GST?

The introduction of the GST is proven to be better tax system as to enhance the effectiveness and efficiency of the existing taxation system in order to eliminate the existing Sales and Services tax (SST) inherent weaknesses such as compounding effects, transfer pricing and value shifting. This is because the GST will be administrated in a fully computerized environment, therefore speeding up the information delivery such as refund claims. In addition, GST could provide fairness and equality as the taxed are levied fairly on the businesses involved such as wholesaling, manufacturing, service sectors or retailing and provide better transparency to consumers as they will know exactly whether the goods or services they consume are subject to tax and the amount they pay for, unlike the present sales tax. Everyone is paying tax with the implementation of GST and the tax burden is spread over, instead of just relying on the income tax derived from the working population, thus GST could provide fairness and equality to everyone. All these benefits provided by the implementation of GST could stimulate the economic growth and increase the competitiveness in the global market.

One of the government's budget objectives is to reduce the fiscal deficit by the implementation of the GST as the government revenue will be increased from the collection of the GST. GST has advantages to certain degree because the revenue increased is not just from local people but from the foreigners too. The collection of the GST can increase the revenue from the tourism industry as some revenue is extracting directly from tourists where the tourists spend on goods and services that made in Malaysia and overall government revenue will be increased.

Moreover, the standard of living to Malaysian consumers and businesses can be improved as the government can have more fund to use for the country development purposes in social infrastructure such as health facilities and institutions, educations and public facilities due to the increment of revenue from the collection of GST. Government can provide for the needs of the public, better healthcare system and provide welfare services for the underprivileged and vulnerable communities with the increment of revenue from the collections of GST. Therefore, the introduced of GST can improve the Malaysian standard of living by the larger funding available to invest for existing improvement and better future development.

Lastly, some of them saying the proposed implementation of GST is good because many countries which over 160 countries have adopted GST and its implying the GST must be good for the country development. Besides, the effectiveness and efficiency provided by the GST system enable Malaysian to have better management of its finances and in order to cited the success of other country such as Singapore, Australia and New Zealand as benchmarks.