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Understand GST and

Effects of Implementing

What is GST
GST is Goods and Services Tax. In other
countries this tax also known as value added
tax(VAT)
GST is a tax levied for each transaction.
Transaction is any exhange of goods or services
between two or more parties, either involves the
exchange of money or not.
GST rate set by the government determine how
much tax is borne by consumers.
Under the law, the GST is imposed on each
transaction unless the transaction is exempted
from the scope of GST.

What is exempted from


GST?
".. The basic foodstuffs such as rice, sugar, salt,
flour, cooking oil, pea dhal, spices, salted fish,
cencalok, budu, and belacan though ..
.. Water supplies and first 200 units of electricity
per month for domestic users..
".. The transport services such as buses, rails,
LRTs, taxis, ferries, boats, highway tolls and
educational services and health services ..
".. Sale and rent of residential and selected
financial services...
Budget speech fom the Minister of Finance, 22 October 2013

All other are charged by


GST
CARS SOAPS BOOKS PENCILS
CAPS BISCUITS BABY CLOTHES
HAND PHONES BOXES BARBERS
RINGS SCHOOL CDs UNIFORMS
MEDICINES CONTRACTORS
JEWELRIES SANDALS MAMAK
RESTAURANTS VACATIONS COWS
PLUMBER KFC FOOTBALL TICKETS
CATERINGS..

All of the services or goods that are not


declared to be "exempted" will be charged GST.
At every stage of the transaction, the GST will
be charged.
Manufacturers, distributors and sellers can get
credits of paid GST*.
Finally, the GST incurred entirely by consumers
(you)
*GST credit- the GST tax that will be refunded to the
dealers for the item purchased.

Implementation mechanism
Example: How GST affects the cost and price of school shoes
Manufacturers only
collect GST from
distributors that
buy shoes, on
behalf of
Distributors
governmentonly
collect GST from
store that buy
shoes, on behalf
of government
Shop only collect
GST
from consumers
buy shoes, on
behalf of
government

Manufactur
ers

Distribut
ors

Shops

Each one cent of the


GST
paid by the
manufacturers is
refund by the
Each
one cent of the
government
GST
through the GST
paid
by the
credit
distibutors is refund
by the government
Each one
cent
of the
through
the
GST
GST
credit
paid by the shops is
refund by the
government
through the GST

who will pay the GST


MALAYSIANS

What differences between GST with


current tax (SST)?
Goods & Services
Tax (GST)

Sales &Services
Tax (SST)

Stage of tax

Stages.
At each stage, the
GST is applied &
trader can get GST
credits.

One stage.
The tax only
applies at the
factory once only.

Scope of
implementation

All are charged by


the GST unless
included in the
excemption list.

Only goods and


certain services
that are listed by
the government

Rate

6% for standard
Different. Some 6%
rated, 0% for zero
(services tax) and
rated*.
some
(sales)
*Zero rated- the dealer
does not have to charge
GST10%
on the
goods / services sold but can get the GST credit on purchase.

Effects of implementing the


GST

Stricter
compliance
requirements
increase the
dealer costs.
Taxable goods
and services
also increase
the dealer cost.

Sco
pe

The scope is greater


causing almost all
goods & services are
taxed. Although lower
rates, many more
expenses are taxed
than now.

Transacti
on costs

Inflatio
n

When almost
all goods &
services are
taxed, and the
transaction
costs rise, this
resulted in
increasing of
inflation and
the prices.

Effects of implementing the


GST
Additional costs to be borne by this
dealer affect their business.
Estimated cost of implementing the
GST (print new invoices, pay
accountants, and other courses)
reached RM15, 000 per year each
company.
This will be included in the cost of
which will increase the price.