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Table of Contents
An Overview of GST Malaysia ...................................................................................................................... 1
1.0 Introduction: ........................................................................................................................................... 2
2.0 What is GST? ........................................................................................................................................... 4
3.0 Why GST : ................................................................................................................................................ 9
4.0 GST Implementation ............................................................................................................................. 11
5.0 The Impact of GOODS AND SERVICE TAX (GST on Individual)..............................................................14
6.0 The Impact of GOODS AND SERVICES TAX on Economies and Industries.19
7.0 Conclusion ...22
References..











1

An Overview of GST Malaysia
Goods and Services Tax (Malaysia)
From Wikipedia, the free encyclopedia

Sources from Wikipedia saying that Gst is :
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, 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. 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 four-percent tax will replace a sales-and-service tax of between
five and ten percent.
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.It was delayed amid
mounting criticism. 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, Protest (which objects to the GST because of concerns about its effects on low-
2

income Malaysians), cancelled a planned protest but has stated that they will continue to agitate
against the legislation.
During the government reading of the 2014 budget, Malaysian Prime Minister Najib
Razak announced a GST tax of six percent starting on April 1, 2015. This will replace the Sales
and Services Tax.
1.0 Introduction:
BRIEF HISTORY OF GOODS & SERVICES TAX (GST) MALAYSIA
The idea of introducing a flat consumption based Goods and Services Tax (GST) in
Malaysia has been floated since 1989. It now seems as though this may become a reality in the
2014 Budget, with implementation beginning within 18 to 24 months at an initial rate of 4 % on
the supply chain. The plan to overhaul the tax system has begun to gain momentum as the
government deals with an increasingly weak economic outlook, combined with global
uncertainty.
While not at the emergency levels of many advanced Western European economies, Malaysia
has not run a structural budget surplus since the Asian Financial Crisis hit in 1997. Federal
government debt as a percentage of Gross Domestic Product (GDP) currently sits at 55.4 %.1
For the time being, this is manageable, but it is the governments ability to reign this spending in,
as well as lack of budgetary reform that has led ratings agency Fitch to downgrade Malaysias
credit outlook to negative this year.
The governments recent 20 sen cut to the fuel subsidy and increasing speculation of a GST
framework to be included in the upcoming budget can be seen as evidence that they are trying to
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remedy both structural and cyclical economic challenges. Furthermore, for far too long there has
been an overdependence on the revenue generated from oil and gas dividends, which currently
account for over a third of total government revenues.
A GST offers a single unified system where the tax burden is equally shared between the
services and manufacturing industries, whilst simultaneously broadening the tax base. This will
help to minimize tax exemptions as well as the compounding effects of pyramiding tax, tax
erosion, transfer pricing and value shifting. In the current economic climate, it will also ensure a
stability, as a GST is less susceptible to the fluctuations inherent in commodity markets.
As evidenced in other countries that have introduced a GST or value-added tax (VAT) at varying
rates, this system offers one of the most simplistic mechanisms available for calculating receipts
that in turn will lead to greater compliance of the code. Issues surrounding the regressive nature
of the GST and how it could disproportionately affect low-income households need to be
addressed in its design so as not to put further financial stress on the 56 % of Malaysian
households whose monthly income is RM3000 or less.3 The current inefficient system also
needs to be restructured so as to give a greater level of transparency to the public, as well as
reduce tax avoidance.
The following policy paper gives a snapshot of the current tax system in Malaysia and analyses
what effect a GST may have on the economy. It also shows how similar tax reforms have been
realized in other countries and offers policy recommendations for the implementation process of
such a reform.

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2.0 WHAT IS GST MALAYSIA?
Consumption Tax before GST
a) SALES TAX
Sales Tax was introduced on the 29th February 1972 as a single stage consumption tax, levied,
charged and paid on goods manufactured in Malaysia and imported. Currently, the rates of sales
tax are as follows:-
Reduced rate of 5% for non-essential foodstuff and building materials
A general rate of 10%
Specific rates for petroleum products
Licensing
Manufacturers of taxable goods whose annual sales turnover exceed RM100,000 is
required to be licensed under sales tax act. Those with annual sales turnover does not
exceed RM100,000 are required to apply for a certificate of exemption from licensing.
Scope of Tax
Sales tax is levied on locally manufactured goods at the time the goods are sold or
otherwise disposed of by the manufacturer. It is called a single stage tax because sales tax
is to be charged once only, either at the input or at the output stage.
o List of goods subject to sales tax at 10%
o List of goods subject to sales tax at 5%



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b) SERVICE TAX
Service tax was introduced on the 1st March 1975 as a single stage consumption tax, levied,
charged and paid on specific services provided by a taxable person in Malaysia. Currently, the
rates of service tax are as follows:-
Flat rate of 5%;
Specific rates for credit card - RM50.00 (effective from 1st January 2010)

Licensing
Any person who carries on business of providing taxable services in any prescribed
establishment is required to be licensed under the service tax act. Licensing is based on
the following threshold:
Threshold Level Taxable Services
No Threshold
a. Hotel of having more than 25 rooms (Group A)
b. Restaurant, Bar, Snack-Bar, Coffee Houses located in hotel
having more than 25 rooms (Group B1)
c. Night-Clubs, Dance Hall, Cabarets, Health Centre, Massage
Parlours, Public Houses and Beer Houses (Group D)
d. Provision of insurance services to business organisation
e. Provision of telecommunication services
f. Provision of services for the clearing of goods from customs
control
g. Provision of accounting services by the Public Accountant
h. Provision of legal services by the Legal Firms
i. Provision of engineering services by the Professional Engineers
j. Provision of architecture services by the Architect
k. Provision of surveying services by the surveyor
l. Provision of Consultancy services by the Consultant Companies
m. Provision of management services by Management Companies
n. Provision of credit card or charge card services
Annual Sale Turnover of RM 150,000 and
above
Services provided by Professional under Group G as follows:-
a. Provision of parking spaces for motor vehicles
b. Provision of courier delivery services
c. Provision of motor vehicles service and repair centres by the
Workshop
d. Provision of security guard or body-guards services by the
Private Agency
e. Provision of employment services by the Employment Agency
Annual Sale Turnover of RM300,000 and
above
a. Restaurants, Bar, Snack-Bars, Coffee Houses located in the
Hotel having 25 rooms and less (Group B2)
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Scope of Tax
Service tax is charged and levied on selected taxable services as prescribed in the Second
Schedule of the Service Tax Regulations 1975.
List of prescribed services subject to service tax at 5%
How service tax works






b. Services provided by Private Clubs including golf clubs (Group
E)
c. Services provided by Private Hospitals (Group F)
d. Services provided by operators of hire-an-drive or hire-car
companies (Group G)
e. Services provided by advertising agency (Group G)
Annual Sale Turnover of RM3,000,000 and
above (effective from 1
st
July 2008)
Restaurants, Bar, Snack-Bars, Coffee Houses located outside the
Hotel including food courts (Group C)
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Understanding 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 on the value of the supply.
GST can only be levied and charged if the business is registered under GST. A business is not
liable to be registered if 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.
Almost all countries collect income tax, which is a percentage of what you earn as an individual.
Another way the government gets revenue is by collecting tax from business operations, like
sales tax and duties on items that are bought or sold.
We need to pay tax so that the government can operate. GST is one method of collecting taxes
which works better than others.
What is GST?
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, 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. 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 four-percent tax will replace a sales-and-service tax of between five
and ten percent.
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. It was delayed amid mounting
criticism. 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-
8

income Malaysians), cancelled a planned protest but has stated that they will continue to agitate
against the legislation.
During the government reading of the 2014 budget, Malaysian Prime Minister Najib Razak
announced a GST tax of six percent starting on April 1, 2015. This will replace the Sales and
Services Tax.
Background
GST is not new
The concept behind GST was invented by a French tax official in the 1950s. In some countries it
is known as VAT, or Value-Added Tax. Today, more than 160 nations, including the European
Union and Asian countries such as Sri Lanka, Singapore and China practice this form of
taxation. Roughly 90 percent of the world's population live in countries with VAT or GST.
Here are some of the tax rates of countries around the world who have implemented GST or
VAT.




9

Malaysian Tax History
In Malaysia, our tax system involves several different indirect taxes:
Import duty
On goods brought into the country
Export duty
On goods produced for sale outside the country
Government Sales Tax
On a wide range of goods at the point of import or at the manufacturer's level, with four
tax rates at 5%, 10%, 20% and 25%
Service Tax
On services provided by restaurants, hotels, telecommunications services, professional
services by architects, engineers, lawyers etc.
Excise Duty
On luxury and 'sin' products such as automobiles, liquor, beer and tobacco products
The proposed GST will replace the Government Sales Tax and the Service Tax.

3.0 Why GST :
The Government's tax reform programmed to enhance the efficiency and effectiveness of the
existing taxation system. GST is proven to be a better tax system as it is more effective ,
efficient, transparent and business friendly and could spur economic growth as well as increase
competitiveness in the global market.

GST is capable of generating a more stable source of revenue to the nation because it is less
susceptible to economic fluctuations. It is important to replace the existing SST in order to
eliminate its inherent weaknesses such as cascading and compounding effects, transfer pricing
and value shifting, no complete relief on goods exported, discourage vertical integration,
administrative bureaucratic red tape, classification issues and etc.
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Various benefits that GST can offer to Malaysian consumers and businesses are:
Improved Standard of Living
The revenue from GST could be used for development purposes for social infrastructure like health facilities
and institutions, educational infrastructures and public facilities to further improve the standard of living.
Lower Cost of Doing Business
Under the current system, some businesses pay multiple taxes and higher levels of tax-on-tax (cascading
tax). With GST, businesses can benefit from recovering input tax, thus reducing cost of doing business.
Nation-Building
GST is a better and more efficient method of revenue collection for the government. More funds can be
channeled into nation-building projects for progress towards achieving a high income nation.
Fairness and Equality
With the GST, taxes are levied fairly among all the businesses involved, whether they are in the
manufacturing, wholesaling, retailing or service sectors.
Enhanced Delivery System
GST will be administrated in a fully computerized environment, therefore speeding up the delivery,
especially for refund claims. This makes it faster, more efficient and reliable.
Increase Global Competitiveness
Prices of Malaysian 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.
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Enhanced Compliance
The current SST has many inherent weaknesses making administration difficult. GST system has in-built
mechanism to make the tax administration self-policing 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 the GST on inputs
in their returns.
Fair Pricing to Consumers
GST eliminates double taxation under SST. Consumers will pay fairer prices for most goods and services
compared to SST.
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.
4.0 GST IMPLEMENTATION
Implementation of Goods & Services Tax in Malaysia :
The cloud over whether goods and services tax ("GST") will be introduced in Malaysia
was finally lifted on 25 October 2013 after the Prime Minister of Malaysia announced the
Budget 2014. The idea of introducing GST was first conceived in 2005, but GST's
implementation had been deferred subsequently to facilitate public education and consultation.
Although the draft GST Bill was read for the first time in Parliament in 2009, the Bill has not
been passed into legislation and no clear timeline was set as to GST's implementation.
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The uncertainty as to GST's implementation cast many doubts as to whether Malaysia
will have a GST regime and if so, when the GST will be implemented. Many businesses were
taking a wait-and-see approach before taking any steps to prepare for GST's implementation. The
Budget 2014 announcement ended the speculation and the uncertainties relating to GST's
implementation. It is announced that the GST will be implemented in Malaysia with effect from
1 April 2015 at the rate of 6% and will replace the current sales and service tax regime. As such,
businesses will have approximately 17 months to prepare for the implementation of GST.
Nevertheless, at the time of writing, the GST Bill remains in a draft form and is still subject to
further amendments.
Preparing For GST's Implementation :
Businesses should take the necessary steps and pro-active measures to be GST ready. Some of
the steps which will need to be undertaken include:
a) Review of Commercial Contracts and Transactions
All long-term commercial contracts and transactions should be reviewed and reconsidered for
GST purposes. The review is important to determine the allocation of the GST burden and the
treatment of contracts spanning the implementation of GST. Particular transitional provisions
may be applicable to such transactions and contracts. Companies should also consider the impact
of irrecoverable GST on their business.
b) Review of Internal Supplies
Companies should undertake a review of all their internal transactions such as the provision of
employee benefits, since such supplies may attract GST. Careful planning of employee benefits
may be required taking into account the GST implications.
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c) Updating of Accounting System / Recording Systems
All accounting and recording systems should be updated to allow for the calculation of output
tax and input tax claims. Businesses must be prepared to bear the compliance costs associated
with the collection and remittance of GST to Customs.
d) Training of Employees
It is important that employees and staff are prepared and well-equipped to implement GST in the
business operations through trainings and awareness programs. Experience in many countries
which have already implemented GST show that early preparation is crucial to ensure a smooth
transition to GST. GST preparations should be undertaken as soon as possible so that companies
are able to properly manage the implementation of GST.
A proper guideline on how to get ready in GST implementation.

Step 1:
Client meet our consultant to discuss their business needs.
Step 2:
Brief our client on how to complete a GST Business Review Questionnaires (BRQ).
Introduction on GST Malaysia
Guidelines on how to fill up the BRQ

Step 3:
Consultant review the completed BRQ.
Answer to client questions on how to fill in the BRQ
Review the BRQ duly completed by client
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Step 4:
Our consultant produce the GST Business Review Report (BRR).
Report is produced based on the information completed in BRQ
Our consultant will present the BRR to the Management
Step 5:
We may organise a workshop for your finance team to understand the GST Business Review
Report (BRR). Client may start the implementation thereafter.

Step 6:
GST registration.
Duration3 - 4 months* (estimated)
* The duration may varies. It subject to the schedule allocated, engagement period, the response
time and the time factor that may affect the whole process.

** This is a set of standardised GST implementation strategy. It is recommended for small and
medium businesses with a simple business structure and very minimum business processes. We
recommend businesses with a complicated business structure to contact us for alternate solutions.
This implementation strategy is not applicable to group registration.
5.0 GOODS AND SERVICE TAX (GST) IMPACT ON INDIVIDUAL
Sometimes we hear about a thing, we are without thinking or trying to find the right information.
We only hear and believe in what comes to us. GST is a tax that will be imposed by the
government to the people. We have heard that the leader of the opposition, the government
struck with the issue of GST and scream, rant and rave that they had importance on people. We
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only look for the bad side but we dont know the fact that there are many benefits in the
implementation of GST. These is the among of the advantages of GST.
ADVANTAGES
1) Fair Prices
People can feel the benefits of immediate implementation of the goods and
services tax (GST) to enjoy cheaper prices for various types of goods.
Chairman of the Tax Review Panel Ministry of Finance, Datuk Kamariah Hussain said,
among the people only have to pay six per cent GST when dining at fast food restaurants
over the service tax is higher now.
Individual that run the business also can reduce their cost after GST to replace the
sales and service tax ( SST ) because the restaurant no longer have to pay sales tax
on the purchase of tables, chairs and other facilities.
With the implementation of the GST, the dealer can offer a cheaper price to
individual result from savings the payment of taxes.
Production cost is lower because GST paid on input is claimable by businesses.
The savings from the ITC should be passed on to the consumers in the form of
lower prices.
GST reduction also affects the Consumer Price Index (CPI) thereby lowering
household spending. The categories that involve in price reduction is clothing and
footwear (2.71%), communication (1.86%), Furnishing, Household Equipment
and Maintenance (1.57%), Restaurants and Hotels (1.20%), Transportation
(0.94%), Alcoholic beverages and tobacco (0.73%), Housing, water, electricity,
gas and fuels (0.12%)
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Not all prices will drop after the GST was introduced and there are certain things
that will experience an increase or remain at the original price. This proves that
not all goods will get an effect from GST implementation.
Government at the same time also will discuss and persuade hypermarkets in the
country to maintain the old prices if the prices rise after the GST are introduced
because there are retailers who buy in bulk from them for resale in other places. If
the price is already high from them, of course the price will be higher when it
comes to customer.
Public amenities also will be exempted.
2) GST is not due to price rises
The implementation of the goods and services tax (GST) at an estimated rate of six
percent will not cause price rises on balance (offset) the elimination of the sales tax and
service.
Implementation of GST also would reduce the effective tax rate on individual.
GST seeks to replace the sales and services tax (SST), will not burden the people
for granted exemption on essential items such as agricultural products and basic
food.
3) Improved Standard of Living
Implementation of the goods and services tax (GST), will not burden the people,
especially in rural areas.
Minister of Rural and Regional Development Minister Datuk Seri Mohd Shafie said ,but
the rate of six per cent is expected to be lower than the sales tax and service at this time.
17

He also said that The cabinet has decided and is a measure that does not burden the
people, because this measure has been detailed several times.
GST is proposed to replace the current sales tax and service available, not to
burden the people.
The revenue from GST also could be used for development purposes for social
infrastructure like health facilities and institutions, educational infrastructures and
public facilities to further improve the standard of living.
4) Greater Transparency
The implementation of the goods and services tax (GST) will be expected only around six
per cent compared to sales and service taxes (SST) between five to 10 per cent over the
years.
Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah said,
GST exemptions on essential goods such as agricultural products and basic food to
ensure that it does not burden the people, especially the poor and low income while
avoiding inflation.
GST provides a win-win situation for the people and the government, GST tax
exemption will take effect on products such as rice and vegetables, and foods such
as rice, sugar, flour, cooking oil, fish, meat and poultry.
GST only applies to luxury goods or services that can be purchased by high-
income consumers.
GST eliminates double taxation under SST. Consumers will pay fairer prices for
most goods and services compared to SSST.
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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.
DISADVANTAGES
Although there are many benefits in GST implementation, there is also a disadvantage about it.
These disadvantages arise when:
1) Continue to want to be a party political issue.
One party said you would do, a protest party said shouldnt do. It causes the
quality of our discussion down to a very low level indeed. That either party or the
party I right you are right, there is no middle way. Maybe in fact, there is a
forgotten fact. This can be proving by current issues that happen in our country
now which is on 1 Mei 2014. An anti-GST street demonstration was held at
Dataran Merdeka, Kuala Lumpur by protest party.

2) The people still dont get what GST exactly mean.
Most people in the country prefer to hear rumors without selecting which ones are
good and which bad. In this case, the education of the GST should be
strengthened in line with its implementation.
People need to be given clear information about the Goods and Services Tax
(GST) to ensure they understand about the measures to be implemented and its
impact on consumers.
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The Secretary-General and Chief Executive of Malaysian Consumer Associations
(FOMCA), Datuk Paul Selvaraj said, consumer confusion about the GST cause
some of them figured it was a new tax form is when it is done replace the sales
and services tax (SST) time.
People should be explained so that they really understand the implementation of
goods and services tax (GST) will be implemented from 1 April 2015 to
overcome the fear of the people in the face of the situation.
Information sessions to be done because people in this country are still not clear
about the GST.
Liang Teck Meng (BN-Simpang Renggam) who said, in this case, government
should take action, such as create a complete website for the public to make
reference to the GST and use the various agencies to give an explanation.
Much has been said about the pros and cons of GST. However, the decision of the government is
to take into account the progressive view of the GST and government also do what should be
done in the well-being of the people and ensure medium-and low-income groups is protected.
6.0 THE IMPACT OF GOODS AND SERVICES TAX ON ECONOMICS AND INDUSTRIES
Economics
Advantages :
1. Increased competitiveness of export market
Goods and services produced in Malaysia will become more competitive and
internationally competitive. That means all goods and commodities that are
exported are not subject to GST (zero-rated)
And all business input free from element of tax.
20

2. Economics Growth Through Tourism
Providing Tourist Refund scheme (Skim bayar balik pelancong) in all the exits at
the international airports.
Maintaining the tax-free status of the island of Labuan, Langkawi and Tioman as
a designated area that is not subject to GST.
3. Diversify Revenue
Reducing dependence on petroleum revenue
Reduce reliance on income tax revenue
4. Tax Revenue Increased
Broadening the tax base
More effective and reduce leakages/leaking revenue (the tax collected at each
stage)
Productivity taxes will increase in line with GDP growth.
Disadvantages :
1. May result in inflation as general products prices may go up.
Inflation occurs due to increase in prices will affect the economy of the country.

2. Economic readiness to accept the GST
Replacing the old with the implementation of the GST tax may reduce the rate of
tax paid goods, but it does not improve the economic welfare of the country.

3. Problem of choosing the right time for implementation of GST
The basic thing that needs to be resolved first, including the preparation of a
planned system and reform attitudes in economic management.
Industries
Advantages :
1. The Cost Of Compliance
The cost of compliance is expected to be insignificant because the lack of
bureaucracy. In Malaysia, 40% of traders who will register under the GST was
licensed under CPJ.
21

GST is not a cost to the business because tax paid on business inputs can be
claimed.
The threshold more than RM500,000. Small businesses exempt from registration
under the GST. An estimated 124,000 (22%) organizations will be registered
under the GST.
2. Business Cash Flow
Not an issue because inputs can be claimed even if the payment of the purchase
has not been made. The method of accounting based on the invoice and monthly
taxable period.
No matching between inputs and outputs make all proceeds may be recovered
quickly and easily.
Special schemes/cases under GST such as Warehousing, group registration, etc.

Disadvantages :
1. May not be beneficial to register in some situations
if your operation is very small (say, only a few transactions per year), then the
administration costs may exceed the benefits of registration.
2. Negative gearing
Where negative gearing starts by a company the tax losses are trapped within the
company. Therefore this often means that negative gearing should be structured
outside the company.

3. Decrease the amount that shareholders received
Tax preferred amounts received by a company will be subject to tax on
distribution to shareholders. This inability to pass through tax preferred amounts
to shareholders without causing further taxation stems from the way that the
imputation system operates.



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7.0 Conclusion :
Recognition must be made of the need for the government to explore methods that increase
future revenue sources. On the condition that the government does announce the GST,
preparations for the implementation are crucial. The primary concern will be the impact upon
low-income households in acknowledgment of the regressively inherent in a GST. The GST will
put upward pressure on cost of living through inflation during the initial stages. Therefore, the
government must address and strengthen the welfare state to protect those most vulnerable in
society. One, all-encompassing way to provide assistance is through transfer payments in the
form of vouchers and exemption targeting for goods which are deemed basic necessities.
Through analyzing the implementation models in the advanced countries such as Singapore and
Australia, we can see from their experiences and factor in constants in preparation for the GST
implementation in Malaysia. As one of the few countries in the region that still do not have in
place a broad consumption based tax system, Malaysia can refer to many countries around the
world who do in preparing for a successful and smooth implementation. A common trait
associated with an efficient GST system is improved international competitiveness. This is in
line and a goal which Malaysia aims toward in becoming a high-income nation by 2020.
Lastly and of utmost importance, if the government intends to expand the tax base and increase
the efficiency of tax collection through the use of a GST, it will bring the majority of the
population within the tax base. Therefore, all citizens become stakeholders in the budget and the
government must begin to display strong political will to cut wastages, leakages and corruption.
Prudent spending and transparent accounting will go a long way in winning over public
acceptance of the GST.