for GST implementation's effective date
starts on the month of October 2014
GST implementation officially commences on 1ST April 2015
Businesses need to submit on 31st May 2015
Businesses need to submit on 31st July 2015
As announced on 25th October 2013 by our prime minister, Dato Seri Najib Tun Razak, GST implementation is set to be effective on 1st April 2015 at 6%.
GST Registration starts on October 2014
1st April 2015
Sales Tax indroduced
Service Tax indroduced
IMF study on Sales and Service Tax in Malaysia
Study visit to South Korea by a team of MOF and customs
Study visit to Canada
Study visit to UK, New Zealand, Australia, Thailand & Singapore
GST is levied on the supply of goods and services at each stages of the supply chain from the supplier up to the retail stage of the distribution. Even though GST is imposed at each level of the supply chain, the tax element does not become part of the cost of the product because GST paid on the business inputs is claimable.
Hence, it does not matter how many stages where a particular good and service goes through the supply chain
because the input tax incurred at the previous stage is always deducted by the businesses at the next in the supply chain.
GST is a broad based consumption tax covering all sectors of the economy i.e all goods and services made in Malaysia including imports except specific goods and services which are categorized under zero rated supply and exempt supply orders as determined by the Minister of Finance and published in the Gazette.
The basic fundamental of GST is it's self-policing features which allow the businesses to claim their input tax credit by way of automatic deduction in their accounting system. This eases the administrative procedures on the part of businesses and the Government. Thus, the Government's delivery system will be further enhanced.
|Sales price||RM100,000||Sales price||RM150,000||Sales price||RM175,000|
|Assume manufacturer's GST for purchases is RM2,000||Add GST 6%||RM6,000||Add GST 6%||RM9,000||Add GST 6%||Not applicable|
|Input tax credit||RM2,000||Input tax credit||RM6,000||Input tax credit||can't claim|
|GST remit||RM4,000||GST remit||RM3,000||Cost increased||RM9,000|
GST shall be levied and charged on the taxable supply of goods and services made in the course or furtherance of business in Malaysia by a taxable person. GST is also charged on the importation of goods and services. A taxable supply is a supply which is standard rated or zero rated. Exempt and out of scope supplies are not taxable supplies.
GST is to be levied and charged at the proposed rate of 6% on the value of the supply. GST can be levied and charged only of the business is registered under GST. A business is not liable to be registered of its annual turnover of taxable supplies does not reach the prescribed threshold. Therefore, such businesses cannot charge and collect GST on the supply of goods and services made to their customers. Nevertheless, businesses can apply to be registered voluntarily.
Standard-rated supplies are taxable supplies of goods and services which are subject to a proposed rate of 6%. A taxable person who is registered under GST has to collect GST on the supply and is eligible to claim input tax credit on his business inputs in making taxable supplies.
Zero-rated supplies are taxable supplies of goods and services which are subject to GST at zero percent rate. In this respect, businesses do not collect any GST on their supplies but are entitled to claim credit on inputs used in the course of furtherance of the business..Read more in Cukai Barang dan Perkhidmatan (Pembekalan Berkadar Sifar)
Exempt supplies are supplies of goods or services which are not subject to GST. In this context, businesses do not collect any GST on their supplies and are not entitled to claim credit on his business inputs.Read more in Cukai Barang dan Perkhidmatan (Pembekalan Dikecualikan)
Supplies which do not fall within the charging provision of the GST Act include non-business transactions, sale of goods from a place outside Malaysia to another place outside Malaysia as well as services provided by the Government sector.
Why GST ?
Under the current system, some business pay multiple taxes and higher levels of tax-on-tax (cascading tax). With GST, businesses can benefit from recovering input tax on raw materials and incurred expenses, thus reducing costs.
Prices of Malaysia exports will become more competitive on the global stage as no GST is imposed on exported goods and services, while GST incurred on inputs can be recovered along the supplies chain. This will strengthen our export industry, helping the country progress even further.
The current SST has many inherent weaknesses making administration difficult. GST system has in-built mechanism to make the tax administration self-policy and therefore will enhance compliance.
Under the present SST, businesses must apply for approval to get tax-free materials and also for special exemption for capital goods. Under GST, this system is abolished as businesses can offset automatically the GST on inputs in their returns.
With GST, taxes are leveled fairly among all the businesses involved, whether they are in the manufacturing, wholesaling, retailing or service sectors.
GST eliminates double taxation under SST. Consumers will pay fairer prices for most goods and services compared to SST.
Unlike the present sales tax, consumers would benefit under GST as they will know exactly whether the goods they consume are subject to tax and the amount they pay for.
We do not pay GST on goods / services which are:
Zero Rated Supplies
These are taxable supplies that are subject to a zero rate. Businesses are eligible to claim input tax credit in producing these supplies, but cannot charge output tax to the consumer.
These are non-taxable supplies that are not subject to GST. Businesses are not eligible to claim input tax credit in producing these supplies, and cannot charge output tax to the consumer.
Suppliers,manufacturers,wholesalers and retailers are able to recover GST incurred on inputs. This reduces the cost of doing business, thus
enabling fairer prices for consumers.
Certain basic goods and services are not subject to GST for socio-economic objectives. These include basic foods, residential accommodation, education, health services, public transportation, and domestic consumption of water supply and electricity up to a certain limit.
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