OVERVIEW

MOHD ROZLAN MOHAMED ALI

Pengarah
Unit Teknikal GST
Persatuan Akauntan Percukaian Malaysia (M.A.T.A.)

UKM
18 MARCH 2015
CURRENT TAX SYSTEM IN MALAYSIA

Direct Tax Indirect Tax

Corporate Tax Import Duty

Individual Income Tax Export Duty
Real Property Gains Tax Excise Duty
Sales Tax
Stamp Duty Consumption
Tax
Service Tax

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CURRENT TAX SYSTEM
SALES AND SERVICE TAX

Sales Tax Service Tax

Year introduced 1972 1975
Scope Selected items at manufacturing
Selected taxable services
stage and imports
Rate 5%, 10%, specific rate for
6%, specific rate for credit card
petroleum
Advantage Supply of raw
materials/components are non- -
taxable
Threshold RM 100,000.00 Up to RM 3mil

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CURRENT TAX SYSTEM
GOODS SUBJECT TO SALES TAX

5%

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CURRENT TAX SYSTEM
GOODS SUBJECT TO SALES TAX

10%

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CURRENT TAX SYSTEM
SERVICES SUBJECT TO TAX AT 6%

Hotel
Restaurant 6%
Parking

Professional Security Services

Service
Service Centre

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INTRODUCTION OF GST IN MALAYSIA

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WHAT IS GST?
WHAT IS GST ?

What is

Goods and Services Tax

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 HISTORY OF GST IN MALAYSIA
HISTORY OF GST IN MALAYSIA

GST has been discussed in Malaysia since….

Value Added Tax

1989 Budget Presentation
By Tun Daim Zainuddin

Consolidated Sales and Services Tax

1993 Budget Presentation
By Dato’ Seri Anwar Ibrahim

Goods and Services Tax (GST)

2005 Budget Presentation
By Tun Abdullah Ahmad Badawi

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GST in Malaysia will be implemented
on 1 April 2015 as announced by the
Prime Minister cum Minister of
Finance during the 2014 Budget
Presentation in Parliament, October
2013.

On 19th June 2014,

the GST Act 2014
has been gazetted

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GST/VAT WITHIN THE REGION

Region Number of countries

ASEAN 7
ASIA 19
EUROPE 53
OCEANIA 7
AFRICA 44
SOUTH AMERICA 11
CARRIBEAN, CENTRAL & 19
NORTH AMERICA
TOTAL 160
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GST/VAT IN ASEAN COUNTRIES

Year of Initial Current

Country
Implementation Rate(%) Rate(%)
Indonesia 1984 10 10

Thailand 1992 7 7

Singapore 1994 3 7

Filipina 1998 10 12

Cambodia 1999 10 10

Vietnam 1999 10 10

Laos 2009 10 10

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GST/VAT WORLDWIDE

Year of Initial Current

Country
Implementation Rate(%) Rate(%)
UK 1973 10 20

Australia 2000 10 10
New
1986 10 15
Zealand
Norway 1970 20 25

Turkey 1984 10 18

Morocco 1986 19 20

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GST/VAT WORLDWIDE

RATE ? YEAR OF IMPLEMENTATION ?

HIGHEST
Hungary (European Union) – 27% FIRST COUNTRY
France, 1954
LOWEST
Nigeria
LATEST COUNTRY
Canada Gambia, Africa - 2013
Taiwan 5%
Iran
Jersey

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Sources : http://gst.customs.gov.my/en/gst/Pages/gst_ci.aspx
WHAT IS GST?

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WHAT IS GST?

A BROAD-BASED consumption tax in

the form of value added tax

MULTI STAGE TAX based on net value
at each stage of business transaction
up to the retail stage of distribution

Also known as VALUE ADDED TAX
(VAT) in certain countries

Tax on final consumption – THE
CONSUMER

GST incurred on inputs is allowed as a
credit to the registrant - OFFSET
AGAINST OUTPUT TAX
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TYPE OF SUPPLY (GOODS OR SERVICES)

Standard Rated Supply

6%
TAXABLE
SUPPLY
Zero Rated Supply 0%
Exempt Supply GST NON-
TAXABLE
SUPPLY
Out of Scope GST
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SCOPE OF GST / TEST OF GST

GST is charged on
 The taxable supply of goods and services
 Made by a taxable person
 In the course or furtherance of business
 In Malaysia

GST is charged on imported goods

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BASIC CONCEPTS AND
GST MODEL

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ABOLISHMENT OF SST

Effective on
Current Tax System
1st April 2015

5%, 6%, 10%, 20%

& specific rate 6%
GST is a REPLACEMENT TAX

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PROPOSED GST MODEL - STANDARD RATED

6%
Standard rate

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PROPOSED GST MODEL - ZERO RATED

Rice, Flour, Salt, Sugar

Agriculture Product Cooking Oil, etc

0%
Livestock supplies Poultry & Eggs

Exported goods and

Fish, Crab, Oyster, etc.
services

First 300 units of

Water usage to
electricity to domestic
domestic users
users
(Current Tariff=RM77)

Others : Medicine, Books, Bread, Newspaper, Fruits, Coffee, Noodle

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PROPOSED GST MODEL - EXEMPTED

• Public Transportation
• Land For Residential, Agriculture And General Use
• Highway and Toll Bridge
• Funeral, Burial and Cremation Services
• Healthcare Services
• Residential
• Education Services
• Financial Services
• Child Care Services
• Supply by Association and Similar Organization

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PROPOSED GST MODEL
GOVERNMENT SUPPLY

Federal Government & Local Authority & Statutory

State Government Bodies

Supplies made in the regulatory

All supplies by Federal & and enforcement (R&E) Functions
OUT OF SCOPE
State Government e.g. assessment rate collection, issuance of
license, penalty

Supplies that have been directed Non R&E functions, i.e.

by Minister in the GST business activities
SUBJECT TO GST (Government Taxable Supply e.g. Rental facilities
Order)
e.g. supply made by RTM,Prison Department

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GST MECHANISM

INPUT TAX OUTPUT TAX

ACQUISITION SUPPLY

PURCHASES SALES

PAYMENT INCOME

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GST MECHANISM (CONTD)

INPUT OUTPUT
Raw Goods
Materials
Rental Businesses
Telephone Services

GST on Input Claim GST on Output

Input Tax
= Input Tax = Output Tax

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GST MECHANISM (CONTD)

GST Rate Claimable

Standard-rated 6%

Zero-rated 0%

Exempted -

Out of Scope -

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HOW GST WORKS ?
STANDARD RATED 6%

GST AT STANDARD RATE 6%

6 6 6
% % %

Manufacturer Wholesaler Retailer Consumer

GST input tax

claimable

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 HOW GST WORKS ?
STANDARD RATED (CONTD)

6% 6% 6%

Manufacturer WHOLESALER Retailer Consumer

Value
Added
Purchase Cost: RM100 Activity Selling Price: RM125
GST* : RM6 GST : RM7.50
Purchase Price:RM106 Added Value: RM25 Total Selling Price: RM132.50
(+ GST : RM1.50)
*RM1.50 will be paid to
Customs
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*Note: claim input tax
HOW GST WORKS ?
STANDARD RATED (CONTD)

Manufacturer Tax Remitted to Government

Price :RM100
Output Tax = RM 6.00
GST:RM6.00

Wholesaler Output Tax = RM 7.50

Price :RM125 Input Tax = RM 6.00
GST:RM7.50
RM 1.50
Retailer
Price :RM150 Output Tax = RM 9.00
GST:RM9.00 Input Tax = RM 7.50
RM 1.50

Consumer
Total amount remitted to Custom:

RM 9.00
GST 6% 30
HOW GST WORKS ?
ZERO RATED

GST AT ZERO RATE 0%

Manufacturer Wholesaler Retailer Consumer

(Kilang Beras (Syarikat Faiza (Speedmart)
Bernas) Sdn Bhd)

Consumer
GST input tax does not
claimable pay any
GST

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 HOW GST WORKS ?
ZERO RATED (CONTD)

0% 0% 0%

WHOLESALER Retailer Consumer

Manufacturer
(Syarikat Faiza (99 Speedmart)
(Beras Bernas)
Sdn Bhd)

Value
Added
Activity
Purchase Cost: RM100 Selling Price: RM125
GST* : RM0 GST : RM0
Purchase Price:RM100 Added Value: RM25 Total Selling Price: RM125
(+ GST : No GST )
No GST will be paid to
Customs
*Note: claim input tax
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HOW GST WORKS?
EXEMPTED

GST AT 6% NO GST

Supplier Private Consumer

Hospital

CANNOT Consumer
claim back does not
the GST paid pay any
GST

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HOW GST WORKS?
EXEMPTED (CONTD)

Supplier Private Consumer

Hospital

Value
Added
Purchase Cost: RM100 Activity Selling Price: RM131
GST : RM6 GST : RM0
Purchase Price:RM106 Added Value: RM25 Total Selling Price: RM131
(+ GST : No GST )

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SST vs GST

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WHY GST?

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.

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GST ADVANTAGES
BENEFITS (CONTD.)
OF GST (CONTD)

Under declaring
1 ) Eliminating hidden • Imported goods
activity
Transfer pricing
• Manufacturing goods

GST will be shown on the invoice

2) Greater Transparency
Consumers will know exactly whether
the goods they consume are subject
to tax and the amount they pay for.
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GST ADVANTAGES
BENEFITS (CONTD.)
OF GST (CONTD)

GST SHOWN IN
TAX INVOICE

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GST ADVANTAGES
BENEFITS (CONTD.)
OF GST (CONTD)

GST registered company will manage their

own accounting for tax.

They can claim any input tax paid without

3) Less Bureaucracy
undergoing any bureaucracy process.

Electronic / Online
 Registration
 GST Statement Submission
 Claiming input tax

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BENEFITS OF GST (CONTD)

4) Fair Tax System and Business Friendly

Fair Tax System – GST will be charged at every stage of

supply chain. (manufacturer, wholesale, retailer) on value
added activity.

Business friendly
- Availability of various scheme provide such as
Approved Trader Scheme, Warehousing Scheme

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BENEFITS OF GST (CONTD)

5) GST can overcome weaknesses of sales and service

tax in terms of :

Double taxation

Tax embedded in goods sold particularly in exports

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BENEFITS OF GST (CONTD)

6) Need to reduce Need to reduce reliance on:

reliance on Direct tax
existing revenue Petroleum revenue
in Malaysia

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GST IMPACT TO CONSUMER

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GST IMPACT TO CONSUMER
PRICE CONTROL AND ANTI PROFITEERING ACT 2011

Effective on 1 April 2011

1 - Price Control
and Anti Governed by KPDNKK
Profiteering Act
2011
To make sure that trader/dealer
does not increase price arbitrarily

Special Committee to combat

profiteering (Price Monitoring
Council)
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GST IMPACT TO CONSUMER
SHOPPERS GUIDE

Illustrate comparisons of prices of goods

and services before and after the
implementation of GST
2 - Shoppers
Guide Issued before GST implementation date

Price were monitored for 1 year after GST

implementation date

Will be publish 1 months before the

implementation of GST date.

Sundry Goods Listing 45

GST IMPACT TO CONSUMER
PRICE SETTER

The Government will get the

3 – PRICE assistance from the hypermarket to
SETTER be the price setter for the benefit of
the consumers

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GST IMPACT TO CONSUMER
GST RELIEF PACKAGE FOR BUSINESSES

Description Effective

Reduce cost of • Reduction in corporate tax rate by 1%. • YA 2016

doing business • Reduction in cooperative tax rate by 1% to • YA 2015
2%.
• Secretarial fee and tax filing fee tax • YA 2015
deductible up to RM 5,000 & RM 10,000
respectively. • YAs 2014 to 2016
• Accelerated Capital Allowances (ACA) for ICT
equipment and software is extended. • YAs 2014 & YA 2015
• Expenses for GST- related training in
accounting & ICT given further deduction.
Financial assistance • RM 150 million allocation for purchase of • 2014 & 2015
accounting software by SMEs
• Training Grant of RM 100 million for GST • 2013 & 2014
Training

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GST IMPACT TO CONSUMER
GST RELIEF PACKAGE FOR BUSINESSES (CONTD)

Description Effective

Increase disposable • Personal tax rate reduction across tax bands

income by 1% to 3%
• Highest marginal tax rate reduced from 26%
to 25%
• Restructuring of income tax band s by YA 2015
increasing chargeable income subject to
maximum rate from above RM 100,000 to
above RM 400,000

Financial assistance • One-off cash assistance of RM 300 to

households who are BR1M recipients. 2015

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ROYAL MALAYSIAN CUSTOMS PORTAL
www.gst.customs.gov.my

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