The implementation of GST or Goods and services tax has been a subject of long debate in Malaysia. What is actually GST ? It is a consumption form of taxation where every single items or service that you purchase is subjected to a certain percentage of tax.
To make things simple, you will be charge an example of 5% GST tax for anything that you order on restaurant or any items that you buy from your supermarket. There are of course exemptions of basic items such as rice, vegetables, meat however the information is still vague at the time of writing.
Why GST ?
Malaysian government has been running on budget deficit for quite some time and GST implementation is inevitable. The recent Flitch downgrade on Malaysian’s credit ratings may help to speed up the implementation of GST. Put it this way, the government is running low on budget and is now looking for additional revenue from GST.
GST is not always bad
In some ways, GST may raise up living costs however GST is form of fairer taxation. The current personal income tax is effective on middle and upper middle working class while ineffective to the poor and small business. All Malaysians should bear the responsibility to shoulder the development of the nation.
What will be GST rate ?
Idris Jala, the Chief of Pemandu did gave example of 7% GST tax. 7% is a little too high figure. Perhaps the GST implementation will be similar to Singapore GST where it starts lower and gradually increase from time to time.
GST Effects on businesses
GST will be very effective against businesses with large unreported profit such as hawkers, farmers or petty traders. GST should have minimal effect if your business is GST registered where you are able to deduct your INPUT and OUTPUT tax and pass the GST cost to your consumer.
