What is GST?
GST is the acronym of Goods and Services Tax and is virtually a tax charged on consumption
or rather spending. This tax is collected throughout the supply process and not a single stage
is left behind. It is therefore charged throughout the chain from the manufacturer, distributor,
wholesaler, supplier and retailers.
2. How will I be affected?
Anybody in the country who plays any role in the economy by being a consumer will
definitely be affected. This means that everyone will be affected by this because everyone
is truly a consumer. You will not need to fill any forms since GST will be collected by
3. Is the GST a new tax?
This is a replacement of the sales tax and service tax that has always been there in Malaysia
and is therefore not a new tax in the land. Being a unit of the Royal Malaysian Customs, GST
maintains the roles of the previous taxation method only that it’s more efficient. It is also
geared towards cushioning the lives of the citizens. While the sales tax has since 1970 been at
the 10% level, GST charges only 6%.
4. Why do we need the GST?
It is true that the government is getting more revenue by using GST than by the sale tax
method previously used. On the other hand, the government has also made life easier by
introducing this tax method and leaving the sales tax method. The reason why more revenue
is being collected even though the percentage levied has been reduced is because there is a
wider base area of taxation in GST system.
5. Will the GST cause inflation?
The overall impact of GST is anticipated to be zero. This is because through the introduction
of GST, some goods will increase in price while others will reduce. These leads to a neutral
impact hence no inflation.
6. Will the GST be levied on basic necessities?
The Malaysian government will take the same procedure that has been taken bvy all the
countries that have introduced GST. These countries have either zero rated or even not
charged GST on some basic commodities. However, it is anticipated that the malaysian
businessmen may get an excuse of GST to increase prices of even the Zero rated goods.
7. Will there be a corresponding fall in income tax to compensate?
So far, it is not clear whether there will be a fall because the minister for finance came out
to say that GST will be introduced with other policies as a package to cushion economic
situation. However, he didn’t say how.
8. Will the GST increase the cost of doing business?
Economists say that there will be not a single impact on the business to business transactions
since all the burdens and relief of businesses are always channelled to the consumer. It is
therefore most likely that the end user is the one who will feel the pinch by the introduction
9. Will the GST take more from the poor than the rich?
According to economists, GST will, impact those in the lower socioeconomic class than
the rich. It si also a double taxation strategy with will mean that people will be taxed more.
However, small businesses have been cushioned by the introduction of the RM500, 000
revenue limit for you to be compelled by law to comply. Other commodities have also been