What is GST?

Definition of Goods & Services Tax

GST is a consumption tax charged on a wide range of domestic & international products, goods
and services. It’s a broad-based tax imposed on every level of a product, from raw materials all
the way to finished goods. It affects all layers of business and consumers – And whether you
realize it or not, you’re being taxed for almost every thing.

Goods & Services Tax (GST)

Malaysia’s budget 2010 reports that the Goods and Services Tax (GST) is currently at the final
stage of completing the study on the implementation, where analysts are measuring the social
impact of its presence in Malaysia.

The Malaysian government said that it could be possible for them to implement this in the near
future. Looking at Malaysia in a broader scale, GST will not only affect big businesses, but small
and medium enterprises (SME) as well. Although there were nimbles of past information saying
that a food outlet can only charge GST if it’s annual turnover is above RM3 million (3,000,000
Ringgit Malaysia), the GST compliance requirements and thresholds has not been officially
announced.

If we were to take into account GST’s implementation into goods and services, we have to
assume that will happen to all stages of the supply chain – Which means from the purchase of
raw materials or start-up goods all the way to end-user (consumer ready) products available for
sale. Ultimately in a product, GST charged to every level are passed on to the next person and
ultimately, the consumer.

Source: http://finance.klmanagement.com.my/gst-goods-and-services-tax/
Goods and services tax from mid-2011

• News

2009-12-16 15:48
KUALA LUMPUR, Dec 16 (Bernama) -- The government intends to implement the goods and services tax
of four per cent in the middle of 2011, Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah said
today.

This would give all parties 18 months to get ready for the implementation, he told reporters at the lobby of
Parliament House after he had tabled the Goods and Services Tax Bill 2009 for first reading in the Dewan
Rakyat.

The bill seeks to provide for the imposition and collection of goods and services tax and related matters.
The GST will replace the sale tax and the service tax currently imposed and collected under the Sales
Tax Act 1972 and the Service Tax Act 1975.

The GST is a broad-based consumption tax based on a value-added concept.

Unlike the present sales tax, which is a single stage tax, the GST is a multi-stage tax. Payment of tax is
made in stages by the intermediaries in the production and distribution process.

The tax itself is not a cost to the intermediaries and does not appear as an expense item in their financial
statements.

The GST covers all sectors of the industry and is a tax on final consumption of goods and services. It is
collected through a credit system where GST incurred on inputs is offset against GST charged on
outputs.

Ahmad Husni said the GST, which was a more efficient tax system in terms of cost effectiveness, would
replace the current consumption tax in the form of sales tax and service tax.

With the implementation of the GST, the government would garner revenue of RM13 billion for the first
year compared to the current RM12 billion, he said.

He also said that businesses would save RM4.1 billion in taxes while the export sectors would save
RM1.4 billion.

"The main purpose for the government to introduce the GST is to make the current taxation system more
comprehensive, efficient, effective, transparent and business friendly," he said.

He said that based on the proposed model, businesses were expected to benefit in terms of lower cost of
doing business as the GST was not a cost to business.

"The government is proposing to impose the GST at a rate which is lower than the sales tax and service
tax rates and to allow certain exemptions from the GST, especially on essential goods such as
agricultural products (padi and vegetables), basic foods (rice, sugar, flour, cooking oil), fish, meat and
chicken so as to ensure that it will not burden the people at large, especially the poor and the lower
income group," he said.

Furthermore, the GST would be more able to reduce bureaucratic practices in the management and
administration of the country's tax system and to overcome the various inherent weaknesses that existed
in the sales and service tax, he added.

Ahmad Husni also noted that companies with revenue of RM500,000 and below would be exempted from
imposing the GST and about 70 per cent of small and medium sized industries (SMEs) would also be
exempted.

The second and subsequent readings of the bill would be done during the sitting of the Dewan Rakyat
next year, scheduled for March.

He said this was to give the opportunity for everyone to scrutinise the bill to provide feedback.

Source: http://www.mysinchew.com/node/32883