• PREPARED FOR:DR.MUSTAPA

• PRESENTED BY: NUR NAJIHAH ABDUL RAHMAN

:…………………….

Challenges And Impact In Implementing

Good And Services Tax In Malaysia

Background of the topic Significance of the topic

Challenges of implementing GST in Malaysia

Discussion / synopsis on GST from Malaysian Budget 2015

The issues and impact of GST:

Outline of presentation

Overview of GST

What is GST? GST Supplies Model

Classification of Items

History of GST/VAT

Who earlier introduce Countries that implemented GST/VAT

Overview of GST :What is GST ? ?

Goods and services tax (GST) is a form of tax levied on spending will be implemented on 1 April 2015

GST is tax on what is spent and not on what is earned.

GST(6%) is not a new tax-as replacing the existing of Sales Tax and Service

(10% & 6%

Overview: Classification of GST

Zero-Rated Items Exempt item

• Agriculture products – paddy & various fresh vegetables

• Beef, mutton, swine

• Fish, salted fish, prawns, cuttlefish, crabs, oyster etc.

• Rice, sugar, table salt, plain flour, cooking oil

• Selected poultry and eggs• Water for domestic use

• First 200 units of electricity (domestic use) for minimum 28 days

• Exported goods and services

• Selected services related to exports

• Public transportation – rail, bus,taxi (excludes

luxury/airport taxi)

• Tolled highway or bridge

• Land for residential, agriculture or general

use

• Funeral-in-a-package

• Private healthcare & education

• Selected financial services

• Childcare services

• Selected accommodation (28 days or more)

Overview: Malaysia GST’s Supplies Model

Overview: GST Supplies Model

GST referred to “taxable” items and “exempt” items

“standard-rated”(taxable supply), - category where suppliers who are GST-registered will collect 6% GST from customers

zero-rated” supply(taxable supply)- which carries 0% -make wholly zero-rated supplies, then it is likely that you will be in a refund position with Customs.

exempt” supply - which does not attract of GST. you will be not refund position with Customs.

a) GST-Standard Rate supplies (6%)

• 1-Manufacturer of Television produced LED Television and sell in a bulk to the wholesaler.

• 2- Wholesaler need to pay =RM1000+ 6% GST(RM60)= RM1160

• 3-Wholeseller sold the TV to the retailer with the price RM2000 per unit. RM2000+ 6%GST(RM120)=RMRM2120

• 4-Retailer would sell the unit of television to the consumer with the price RM4000.RM4000+ 6%GST(240) =RM2240

• 5-Overall consumer paid RM4240.And the GST that need to pay is total RM240

b) GST-Zero Rate supplies (0%)

c) GST-Exempt rate (0%)

Principle of GST

Multi Stage Tax Businesses Bear

Compliance Burden

Broad-based TaxTax Neutral to

Business

History of GST/VAT

• VAT was invented by the French in 1954

• Goods and Services Tax also known as the Value Added Tax (VAT) or Harmonized Sales Tax (HST) was first introduce by a German economist during the 18th century

• In 1954, the tax was finally adopted by France. Maurice Lauré , Joint Director of the French Tax Authority, was the first to introduce VAT on April 10, 1954.

Countries Implemented

No. Region No. of Country

1 ASEAN 7

2 Asia 19

3 Europe 53

4 Oceania 7

5 Africa 44

6 South America 11

7 Caribbean, Central & North America 19

Asia :Singapore

Year GST Rate

1 Apr 1994 to 31 Dec 2002 3 %

1 Jan 2003 to 31 Dec 2003 4 %

1 Jan 2004 to 30 Jun 2007 5 %

1 Jul 2007 onwards 7 %

Singapore

• Introduced a GST in April 1994, paired with a reduction of direct and other indirect taxes

• Restructuring of the tax system began with a GST rate of 3 %

• Today, Singapore’s GST rate is 7 % - its last revision was in 2007. The introduction of a GST in 1993 is simultaneous with the various package offset

Europe Country: Australia

GST known as output VAT(ouput tax to producer),and input VAT (tax that paid by company after received the good

Australia, the idea was first floated in 1975. Australia imposes flat rate on goods and services and replaced a range of existing taxes

Lower income group also get the rebate from paid of the GST

Recommendation

Government should created more items under zero rate supplies rather than exempt rate supplies.

Why not we just improved the earlier tax that we had, (SST tax) rather than imposed new one?

Malaysia should provide continuous and many more paying offset to lower income group like practised in Singapore

• THANK YOU FOR LENDING YOUR EARS