What is GST

GST (Goods & Services Tax), which is also known as VAT or the value added tax in many
countries is a multi-stage consumption tax on goods and services.
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.

Understanding GST Concept & Fundamental

How GST is charged at each level of supply chain - standard rated supply

GST Mechanism - Standard Rated

Retailer (You) is not GST registered

GST 6%

Assume manufacturer's GST for

purchases is RM2,000

Sales price RM100,000

Sales price RM150,000

Add GST
RM6,000
6%

Add GST
RM9,000
6%

Total

Total

RM159,000

Input tax
RM2,000
credit

Input tax
RM6,000
credit

GST remit RM4,000

GST remit RM3,000

(6,0002000)

RM106,000

(9,0006000)

Sales price RM175,000

Add GST 6% Not applicable
Total

RM175,000

Input tax
credit

can't claim

Cost increased RM9,000

Cost increased N/A

You can't claim back for the RM9,000 of GST you paid to your wholesaler.
You can't charge GST on consumer.

Scope and Charge

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 if the business is registered under GST.

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.

Types of Supply
1.

2.

Standard-rated supplies
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

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)

3.
Exempt supplies

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)

4.
Supplies not within the scope of GST

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 ?

Why GST instead of other higher tax ?

GST is a better and fairer tax system compared to SST (Sales & Service Tax) as GST will :
1.

Lower business cost

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.

2.

Increase global competitiveness

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.

3.
4.

Enhance compliance

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.

Reduces red tape

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.

5.

Equity

With GST, taxes are leveled fairly among all the businesses involved, whether they are in the
manufacturing, wholesaling, retailing or service sectors.

6.

Fair pricing to consumers

GST eliminates double taxation under SST. Consumers will pay fairer prices for most goods and services
compared to SST.

7.

Greater transparency

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.

Not Subject to GST

We do not pay GST on goods / services which are:

Zero-rated supplies

Exempt supplies

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.
Exempt Supplies
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.

Benefit to Consumers

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.

http://www.gst.com.my/what-is-gst-goods-and-services-tax.html

Goods and Services Tax (Malaysia)

From Wikipedia, the free encyclopedia

A goods and services tax in Malaysia (GST), a value added tax, was scheduled to be
implemented by the government during the third quarter of 2011, [1] but has not yet been
implemented. The government is still studying the possible impact of the tax and has not yet decided
when it might come into effect.[2] 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 4% tax will replace a sales-and-service tax of between 510%. [3][4]
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. [5] It was delayed amid mounting criticism.
[6][7][8]
The government responded by asserting that the tax on oil income will not be sustainable in the
future. National Consumer Complaints Centre head Muhammad Shaani 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. Shaani 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. Maamor 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. [9]
During the government reading of the 2014 budget, Malaysian Prime Minister Najib
Razak announced a GST tax of 6% starting on April 1, 2015. This will replace the Sales and
Services Tax.[10][11][12][13] Implementing GST tax will be a part of the Governments tax reform program to
enhance the capability, effectiveness and transparency of tax administration and management. [14]
During the unveiling of the national budget, it was announced that the following goods and services
would be exempted from GST:[15][16]

RON95 petrol, diesel and LPG

Electricity up to 300 Kwh

All local and imported fruit

Types of bread, tea, coffee and noodles

Medication for treatment of 30 diseases

Reading materials and newspapers

http://en.wikipedia.org/wiki/Goods_and_Services_Tax_(Malaysia)

An Overview of GST Malaysia

1. BRIEF HISTORY OF GOODS & SERVICES TAX (GST)
MALAYSIA
In recent months there has been increasing talk in the market that the long proposed
Goods and Services Tax (GST) is likely be announced in the coming Budget 2014. Most
economists believe that GST in Malaysia will commence in 2015, giving a lead time of
14 months for businesses in Malaysia to get ready.
GST was first announced in the 2005 Budget for implementation in 2007. However, in
February 2006 the Malaysian Government announced that GST would be deferred as
more time was needed to get feedback from the public.
Subsequently, GST was tabled for first reading in 2009 for proposed implementation in
2011. The bill was supposed to be presented for second reading in 2010 but was
withdrawn.
Finally, on the 25th of October 2013, Malaysian Prime Minister Datuk Seri Najib Razak
announced the introduction of the Goods and Services Tax (GST) in Budget 2014 to
replace the current sales and services tax, GST will be effective on April, 2015.

Upon implementation of GST in Malaysia, we will join the 146 countries around the
world which has GST or VAT. We will also be joining the 7 out of 10 ASEAN countries
which have either GST or VAT.

2. WHAT IS GST MALAYSIA?

Goods and Services Tax (GST) is a multi-stage consumption tax on goods and services
whereby each point of supply in a production chain is potentially taxable up to the retail
stage of distribution. At the same time suppliers are entitled to refunds of GST incurred
on business inputs. The basic fundamental of GST Malaysia is its self-policing features
which allow the businesses to claim their Input tax credit by way of automatic deduction
in their accounting system.

GST in Malaysia is proposed to replace the current consumption tax i.e. the sales tax
and service tax (SST). The introduction of GST is part of the Government's tax reform
program.

3. PROPOSED RATE OF GST IN MALAYSIA

The GST rate previously proposed in the GST bill in 2009 by the Malaysian Government
was 4%. At this point in time, the rate may be slightly higher.
For GST Malaysia there are 3 types of supply:
i. Standard rated supply
Standard-rated supplies are goods and services that are charged GST with a standard
rate. GST is collected by the businesses and paid to the government. They can recover
credit back on their inputs. If their input tax is bigger than their output tax, they can
recover back the difference.

ii. Zero rated supplies

These are taxable supplies that are subject to a zero rate. Businesses are eligible to
claim input tax credit in acquiring these supplies, and charge GST at zero rate to the
consumer.

iii.Exempt supplies
These are non-taxable supplies that are not subject to Malaysia GST. Businesses are
not eligible to claim input tax credit in acquiring these supplies, and cannot charge
output tax to the consumer.

If you would like to find out further on Goods and Services Tax (GST) Malaysia and how
we can help you, please feel free to contact us today. We are a group of professional
chartered accountants, tax specialists and business consultants dedicated to advise
and assist Malaysian businesses grow. Our professional accounting firm is located in
the heart of Kuala Lumpur (KL) the capital of Malaysia.
Our accounting firm in Kuala Lumpur (KL) Malaysia have been established for more
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http://www.yycadvisors.com/overview-of-gst-malaysia.html

http://www.scribd.com/doc/34573677/What-is-GST#scribd