Gst in Malaysia

Topics: Tax, Value added tax, Progressive tax Pages: 3 (810 words) Published: March 23, 2013
Goods and Services Tax (GST)
GST is a consumption tax based on the value-added concept. GST is imposed on goods and services at every production and distribution stage in the supply chain including importation of goods and services. The GST implementation is part of the government’s tax reform program to enhance the capability, effectiveness and transparency of tax administration and management. The Government has not determined the implementation date of GST in Malaysia. Presently, the Government is actively involved in providing awareness and knowledge on the concept and rules regarding GST implementation. If GST is implemented, the Government will provide ample time between 18 to 24 months for the businesses and industries to prepare themselves for the implementation of GST. At the moment, the government has not fixed the GST rate to be imposed in Malaysia.  Nevertheless, the social and pricing impact studies conducted by the Ministry of Finance indicated that the suitable GST rate is in the range of 4%. GST is a more comprehensive, effective, transparent, and business friendly tax system. GST can overcome the various weaknesses inherent in the present consumption tax system.  The inherent weaknesses under the present tax system are the cascading tax, double tax and pyramiding tax, tax erosion and leakages through transfer pricing and other means. Besides that, GST is expected to increase tax compliance and is easier to administer in view of its self policing method. Besides that, the businesses are required only to submit simplified tax returns based on prescribed formats. All records and documents relating to the relevant transaction are required to be kept in the business premises for audit by the GST auditor. How does GST work? GST is charged and collected on all taxable goods and services produced in the country including imports. Only businesses registered under GST can charge and collect GST. GST collected on output must be remitted to the government....
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