...and policies concerning individuals and sole proprietor businesses that were proposed in the Budget 2014. The three significant changes in tax policies are listed below. Review of Individual Income Tax In consideration of the implementation of the Goods and Services Tax (GST) which takes effect on 1stApril 2015, the government had proposed several changes to reduce individual income tax rates with effect from Year of Assessment (YA) 2015. The proposed changes are: I. Income tax rates for resident individuals is to be reduced by 1% to 3% II. Income tax rates for non-resident individuals is to be reduced by 1% from 26% to 25% III. Current maximum tax rate at 26% to be reduced to 24% IV. Two new chargeable income bands be added above the existing highest income band exceeding RM 100,000, with RM100, 001-RM250, 000 as the second highest band and RM250, 001-RM400, 000 as the highest band. V. Chargeable income subjected to the maximum rate will be increased from exceeding RM100,000 to RM400,000. Such proposed changes will bring about savings across the band for all taxpayers and so increase the disposable income for all individuals. This measure is necessary as the implementation of GST will increase the cost of living which will impact the lower income bracket the most. The proposed change will bring about a more progressive tax structure as families with a monthly income of RM4, 000 will no longer have a tax liability. Also, this will create tax rate differentials...
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...Goods And Services Tax (GST) is a broad-based consumption tax. It is an indirect tax which a person pays when he spends money. It is a multistaged value added tax, which means tax is charged on every supply of taxable goods and services at all levels in the supply chain i.e. production, manufacturing, wholesale and retail. More than 120 countries have already implemented GST which is paid by customers when they purchase goods and services are more sophisticated than the tax on retail sale. Even though GST is charged at each level of the supply chain, each business in the supply chain will charge tax only for the value he adds to the product in the supply chain. It will not become part of cost of the product as GST paid on business inputs is a tax credit claimable by registered business. The main issues concerning about the implementation of GST is the costs of the goods will increase which will burden the people in the country. Although the government claim that the implementation of GST will not hurt the businesses and people as the tax paid on the inputs at the previous stage is claimable or deductible, overall the the cost of goods will still increase as the producers-pass the full value added to the end consumers at the final stage. Consequently, there might have inflation effect since the GST is applied to the prices of all goods, at every stages which result in inflation as the general products prices may go up and the hyperinflation might occur from the continuously...
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...11 3.5 EXPECTED RESULT 12 4.0 DISCUSSION AND CONCLUSION 12 5.0 REFERENCES 13 1.1. Abstract The Government of Malaysia on its latest Budget 2011 has announced on their intention to implement the Goods and Services (GST) tax system by middle year of 2011 and therefore, will replace the present tax system which is known as Sales and Service tax (SST). It was first announced by the previous Prime Minister, Datuk Seri Abdullah Ahmad Badawi in 2005. The primary objective of the government in replacing the previous SST system with GST is for the economy development and also to generate more revenue for the country since Malaysia is facing a bad budget deficit. Goods and Services tax is being practiced by more than 140 countries worldwide which most of the countries that are practicing it are the developing countries including our neighbors, Singapore and Thailand. However, there has been much protest, notably from the people against this new tax system. Throughout the research, it will determine on the people’s thought regarding the GST system and why are they against it. A brief explanation about GST system will be given first, in terms of the meaning and the workflow of the system as a way in conformity with their raw perception about the system before they understand it. This research will use the citizen of Malaysia as the sample. 1.2. Introduction...
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...Goods and Services Tax 1 GOODS AND SERVICES TAX BILL 2014 ARRANGEMENT OF CLAUSES Part I PRELIMINARY Clause 1. Short title and commencement 2. Interpretation 3. Meaning of “business” 4. Meaning of “supply” Part II ADMINISTRATION 5. Director General and other officers and their responsibilities 6. Recognition of office 7. Public servants 8. Confidentiality of information Part III IMPOSITION AND SCOPE OF TAX 9. Imposition and scope of goods and services tax, etc. 10. Rate of tax 11. Time of supply 12. Place of supply 13. Supply of imported services 14. Place where supplier of services belongs 15. Value of supply of goods or services 16. Value of goods imported 17. Zero-rated supply 18. Exempt supply 2 Bill Part IV REGISTRATION Clause 19. Registration of taxable person 20. Liability to be registered 21. Notification of liability and registration 22. Cessation of liability to be registered 23. Direction to treat persons as a single taxable person 24. Voluntary registration 25. Notification of cessation of liability or voluntary registration 26. Cancellation of registration 27. Group registration 28. Registration of partnership 29. Registration of societies or similar organisation 30. Registration of branches or divisions 31. Personal representatives deemed to be taxable persons 32. Exemption from registration for persons making or intending to make zero-rated supply Part V ACCOUNTING, ASSESSMENT, RECOVERY, ETC. 33. Issuance of tax invoice 34. Production of tax invoices by computer...
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...Services Tax (GST): A New Tax Reform in Malaysia Nor Hafizah Abdul Mansor Faculty of Accountancy Universiti Teknologi MARA (UiTM), Malaysia Email: norha058@johor.uitm.edu.my Azleen Ilias College of Business and Accounting, Universiti Tenaga Nasional (UNITEN), Malaysia Email: Azleens@uniten.edu.my Abstract The Goods and Services Tax (GST) is becoming one of the most prominent topics in Malaysia. The announcement by the Malaysian Ministry of Finance (MOF) in the Budget 2010 on the implementation of GST had created various reactions from practitioners, academicians, general public and most important businesses. GST is one of the tools that are proposed by the Government to reduce continuous deficit budget in Malaysia. This paper discusses the GST as a new tax reform in Malaysia, and covers several issues in order to enhance the understanding and readiness among Malaysian in adopting GST. Keywords: Tax reform; GST; budget deficit. 1. Introduction The introduction of Goods and Services Tax (GST) was first announced in the Budget 2005 in order to replace the existing sales and services tax structure in Malaysia. This new tax reform is projected to be implemented in January 2007. However, the Government has announced on 22 February 2006 that the implementation would be postponed to a later date. Recently in Budget 2010 the Government is currently at the final stage of completing the study on the implementation of GST, particularly to identify the social impact of GST on the rakyat....
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...THE PERCEPTION OF TAXPAYERS TOWARD GOODS AND SERVICES TAX (GST) IMPLEMENTATION IN MALAYSIA CHAPTER ONE - INTRODUCTION 1.1 Backgroud of Study Malaysian taxation system is generally divided into two, which are direct taxes and indirect taxes. Indirect taxes are controlled by the Royal Malaysian Custom Department (RMCD) and it consists of four components such as excise duties, customs duty, sales tax and service tax. Direct taxes are under the control of the Inland Revenue Board of Malaysia (IRBM). The IRBM is responsible for all policies relating to direct taxes such as income tax of individual and business, petroleum income tax, real property expansions tax, and stamp duty. From the government perception, taxation is a vital economic tool because it can be employed to regulate the economy, to invigorate economic growth through the granting of fiscal incentives as a principal aim of implementing tax policies and to provide funds for development projects (JeyapalanKasipillai, 2005). The contribution of direct taxes and indirect taxes to government revenue in 2009 amounted to RM78.375 billion (49.4%) and RM28.129 billion (1 7.73%), respectively. This shows that taxation contributes more than 60% to the Malaysian government revenue. Recently, the Malaysian government established the implementation of goods and services tax (GST) to replace Sales Tax and Services Tax (SST). The GST plan was first raised in 1988 but at the time it was considered unnecessary because the sales...
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...EPGB6122 Title: “Public Readiness in GST Implementation 2015 - In case of Kuala Lumpur, Malaysia” Prepared by: Noorul ‘Aini Hanifa binti Su’aidi EGC140004 Masters in Public Administration Semester 2014/2015 Public Readiness in GST Implementation 2015 - In Case of Kuala Lumpur, Malaysia 1. Background Taxation is one of the important elements in managing national income, especially in developed countries and has played an important role in civilized societies since their birth thousands years ago (Lymer and Oats, 2009). The introduction of Goods and Service Tax (GST) was first announced in Malaysia Budget 2005, and then projected to be implement in January 2007. In February 2006, government has announced that the implementation would be postponed to a later date. In 2010, it was when Government finalizing the study of the implementation of GST and identifying the social impact of GST on the public and inviting many discussions among expert and GST proponents publicly. The uncertainty on GST implementation cast many doubts as to whether Malaysia needed the GST regime, and if so, what could be the public benefits to the public from this exercise. The government had putting a great effort in promoting the implementation of GST, however an attention to educate the public of GST understanding should be in place as well. Hence, GST is not a new exercise of tax; with more than 140 countries worldwide having had implemented GST, and this is includesd many developed...
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...Overview of GST GST (good and service tax), other words it also known as VAT (value added tax). It have implemented in many countries throughout the world. Currently there are 170 counties in the world that have implemented GST /VAT. NO REGION No of country 1 ASEAN 7 2 Asia 19 3 Europe 53 4 Oceania 7 5 Africa 44 6 South Africa 11 7 Caribbean, Central and North America 19 Table 1: No of countries implement GST/VAT Sources: Ministry of Finance GST is a multi-stage tax system, this is due to its nature which the tax is collected based on the supply of goods and services at each of the supply chain from the supplier to the retailer stage of the distribution. Even though GST is imposed at every stage of the supply chain, but the tax element will be not become a part of the cost of the product, because the GST paid on the business inputs is claimable as input tax. Where the business will pay the GST as output tax and claim for the input tax from the customs. In addition, it does not matter how many stages where a particular goods and services goes through the supply chain because the input tax incurred at the previous stage is always deductible by the businesses at the next in the supply chain. GST consider as a broad based consumption tax, which includes all sectors of the economy. In Malaysia the GST have been establish in a very clear manner, for example all goods and services made in Malaysia including...
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...Singh, B (March 7, 2010), ‘Introduction of GST in Malaysia – Short and Long-Term Impacts’, Tax Guardian Quarter 2. 1.0 Introduction In this article, Bhupinder Singh is evaluating the short-term and long-term effect of implementation of Goods and Services Tax (GST) in Malaysia based on the experience of other countries like Australia, Singapore, Canada and so on. GST is known as Value Added Tax (VAT) is a broad-based consumption tax levied on goods and services. Bhupinder Singh concluded that there is hardly a definite way to evaluate the short-term and long-term impacts of the introduction of GST in Malaysia. The advantage of GST is that it only charges on the final supply to the end consumer. Besides that, GST will be replacing the existing service tax and sales tax, thus, it will cause those taxable items to become cheaper. However, there’s still has disadvantage of GST, that is, there will have large number of goods and services which are free from tax will be burdened with GST. 2.0 Summary In this article, Bhupinder Singh mentioned that GST is designed to not be a cost, but a tax which is recoverable and should not be passed on to the next consumer in the supply chain. GST will replace both service tax (5%) and the sales tax (5% and 10%), theoretically should result in reduction in the price of taxable items. However, the author also mentioned GST is regressive tax where it is charged more towards the poorer consumer as GST tax supposed to be imposed on basic goods and...
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... Pages | 1. Introduction to GST 4 1.1. Background Of Study 4 1.2 What is GST 6 1.3 Why is GST implemented 8 1.4 Difference between GST and SST 9 1.5 General operations of GST 10 1.5.1 Goods and Services Tax (Zero-rated supply) Order 2014 11 1.5.2 Goods and Services Tax (Exempt supply) Order 2014 132. Content 14 2.1 Effect of implementation of Goods Services Taxes (GST) in Malaysia 14 2.1.1 GST are regressive tax or progressive tax? 14 2.1.2 Effect of implementation of GST on inflation based on CPI 16 2.1.3 Effect of implementation of GST on the household income 19 2.2. Impact of GST on sub regions of Malaysia ...
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...Introduction On 10th October 2014, Dato’ Sri Najib Tun Razak, a Prime and Finance Minister, unveiled Budget 2015 addressing key issues on promoting fiscal sustainability and easing the transition to GST for business and consumers, while placing the nation on a firmer growth trajectory towards Vision 2020. Part 1 The three key issues concerning the individuals and sole-proprietor business have been introduced in 2015 budget. The first issue is about individual tax. The first change is that the income tax rate is reduced by 1 to 3% for resident individuals depending on different levels of chargeable income since Year of Assessment (YA) 2015 (KPMG, 2014). This results in that tax payers with family and income of Rm4,000 per month will not have tax liability. Besides, the income tax rate for non-resident individuals is reduced by 1% from 26% to 25% (KPMG, 2014) Chargeable Income(RM) | Current Tax Rate (%) | Proposed Tax Rate (%) | Reduction(%) | 1—5,000 | 0 | 0 | - | 5,000—20,000 | 2 | 1 | 1 | 20,001—35,000 | 6 | 5 | 1 | 35,001—50,000 | 11 | 10 | 1 | 50,001—70,000 | 19 | 16 | 3 | 70,001—100,000 | 24 | 21 | 3 | 100,001—250,000 | 26 | 24 | 2 | 250,001—400,000 | 26 | 24.5 | 1.5 | Exceeding 400,000 | 26 | 25 | 1 | This tax brackets illustrates the chargeable income is raised from RM100,000 to RM400,000 and the rate for chargeable income band exceeding RM100,000 is structured into three bands with reduced rates of 24%, 24.5% and 25%, which results in existing...
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...Services Tax in Malaysia Lim Kim-Hwa Penang Institute & University of Cambridge limkimhwa@penanginstitute.org Ooi Pei Qi Penang Institute peiqi.ooi@penanginstitute.org 8 October 2013 Abstract External economic factors and Malaysia’s domestic fiscal position dictate that the Goods and Services Tax (GST) is likely to be introduced in the upcoming Budget 2014. In this paper, we: 1) assess if GST is a progressive or regressive tax; 2) study the impact of GST on Malaysian households; 3) estimate the total GST raised from households in perfect condition vs. practical circumstance; 4) estimate the expected inflation spike based on the Consumer Price Index; and 5) discuss the wider implications of implementing GST. Despite setting essential items like basic food, public transportation, education and healthcare as exempt or zero rated items, we show that GST is a regressive tax. Using 7% as the standard GST rate, the average household is expected to pay 2.93% of monthly income as GST (RM 104 per month in July 2013 values). Households will pay higher percentage of their income as GST if they are: middle and low income groups (with those earning around RM 2,500 per month paying 3.07%), engaged as technicians, clerical and services workers, farmers and fishermen, in single person household, in young households (less than 24 years old), Bumiputera-led households and households residing in Peninsular Malaysia. We find that it is not possible to make GST a progressive...
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...Literature Review 1.1 Readiness, Perception and Awareness of people towards GST. The literature on the GST is extremely wide . The are many areas that can be focus on basically while doing my research . The most highlight areas on GST is on the public reaction towards GST in Malaysia before the implementation which can known their readiness , perception and awareness on GST. According to ( Mohd Rizal Palil ,2011) he has done a research in Malaysia on the impact of Good and Service Tax towards Middle Income Earners. The author has done survey towards people all around Kuala Lumpur through questionnaire. Based on the finding of his research he reveals that most of the employees does not support the government decision for the implementation of GST and also they strongly does not accept the fact that GST will be implemented in the nearest future. At the same time they strongly does not support the implementation. Based on (K. Saira ,2010) he has done a research on the awareness of the people towards GST and his finding indicates that people are not aware that GST will be charge on Goods and Services. The researcher conclude that people are not aware of GST as soon its going to be control in their life. Beside that they are not aware that it will impact on the economy very well. (K. Saira ,2010) There is also another research which is concerning about the perception of Tax Payers on GST by (Tan Mei Lian ,2010) .The author has also done survey questionnaire towards people...
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...18wefqewfqewfqwefqwefqwefqwe fqwefqewfq 5wefqwefqwefqwefqwefqwefqwef Appendix 19qwefqwefqefqefqwefefwefweqfwefwqefwef 1. INTRODUCTION The Goods and Services Tax (GST) can be defined as a value-added tax that is levied on most goods and services sold for domestic consumption. The tax is implemented to provide revenue for the federal government. In Malaysia, the GST was scheduled to be implemented during the third quarter of 2011 but the implementation was delayed until the 1 st of April 2015. The Goods and Services Tax was tabled for the first time at the ‘Dewan Rakyat’ on 16 th of December 2009. Since there is a high number of criticism, it was delayed. On 25 th of October 2013, during the government’s reading of the National Budget 2014, the Malaysian Prime Minister, Dato’ Sri Najib Razak announced a GST tax of 6% will be implemented starting on the 1 st of April 2015 to replace the Sales and the Services tax. The implementation of the GST is a part of the government’s tax reform program to enhance the capability, effectiveness and transparency of tax administration and management. Since the government’s reading regarding GST in the National Budget 2014, there are a lot of reactions by Malaysians. Many of them were unhappy with the news and some of them are happy with the announcement of GST. Each party has their own thoughts and opinion in regards to the government’s implementation. In this report, we will present to you our findings for our study regarding...
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...BACKGROUND OF STUDY Goods and Services Tax (GST) is an issue frequently being discussed recently in Malaysia, this happen when the government announced to implement the GST. The national budget of Malaysia 2014 had been discussed in parliament on 25 October 2013 proposing that GST would be implemented commencing on 1 April 2015 at 6% rate. GST, is also known as the value-added tax (VAT) in many countries such as Singapore, Hong Kong, United Kingdom and Canada. Currently, more than 160 countries have implemented GST. Tax is recognized as one of the main sources of government’s income. GST has been raised by the Malaysia Government as an approach to reduce its deficit. SMEs are defined as a business enterprise in the manufacturing sector with an annual sales turnover not exceeding RM50million or with less than 200 full time employees, while for the services sector enterprises the corresponding number are RM20 million or 75 workers. Any businesses with annual sales of taxable turnover exceeding RM500,000 is mandatory registration with Royal Customs Malaysia. With registration can allow the business owners to claim the GST paid on the purchases or inputs which will otherwise become a cost. PROBLEM STATEMENT The purpose of the Goods and Services Tax implementation is to solve the economics problem, this including inflation, turmoil and also unemployment. With this GST can enhancing the economic growth of the country. The huge amount of GST collected by government, the government...
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