What is GST? Definition of Goods & Services Tax
GST is a consumption tax charged on a wide range of domestic & international products, goods and services. It’s a broad-based tax imposed on every level of a product, from raw materials all the way to finished goods. It affects all layers of business and consumers – And whether you realize it or not, you’re being taxed for almost every thing.
Goods & Services Tax (GST)
Malaysia’s budget 2010 reports that the Goods and Services Tax (GST) is currently at the final stage of completing the study on the implementation, where analysts are measuring the social impact of its presence in Malaysia.
The Malaysian government said that it could be possible for them to implement this in the near future. Looking at Malaysia in a broader scale, GST will not only affect big businesses, but small and medium enterprises (SME) as well. Although there were nimbles of past information saying that a food outlet can only charge GST if it’s annual turnover is above RM3 million (3,000,000 Ringgit Malaysia), the GST compliance requirements and thresholds has not been officially announced.
If we were to take into account GST’s implementation into goods and services, we have to assume that will happen to all stages of the supply chain – Which means from the purchase of raw materials or start-up goods all the way to end-user (consumer ready) products available for sale. Ultimately in a product, GST charged to every level are passed on to the next person and ultimately, the consumer.
from my opinion the implementation of gst will only worsen the daily life of the middle class and the lower class earners. they will really hit by this gst. our government should think other means or ways to collect income from the rakyat coz this will really create the domino effects. The price of goods will increase and everything will be out of control, like what had happen when our gov. reduce the oil subsidy. Actually the gov should be more creative ex. attract more fdi, increase the tax at exclusive restaurants, hotels etc.
Dear Prime Minister,
I think before General Election 2012/2013 better don’t GST first.
After General Election 13 ( GE13) then only you should do the following :
1. Implement GST (make sure percentage as high as possible)
2. Increase Petrol to beyond the RM2.80 mark set by Abdullah Badawi.
Don’t worry got many ideas such as ‘ We should not hide behind subsidy any more’ and so on…
3. Think of other ideas to victimised malaysian
Furthermore what can the Malaysian do?
You already got back the remaining 4 states what ! (After GE 13)
The other side also as havoc as your BN side maaa….
…who else to vote
Long Live the BN….
Without prejudice, we all know that GST will eventually get implemented, whether we want it or not, or wouldn’t it? But is it actually lower than the current SST, even tough the proposed amount is only 4%? SST is only applicable to a specific chain on industry and sectors, for example restaurants and entertainment outlets. With GST, practically every thing that we purchase and consume is going to be subjected to tax (GST).
Let’s look at a layman’s example. We may be subjected to SST perhaps a few times a month, when we patronize F&B and entertainment outlets, and lets say, we spend about RM150.00. This would mean the SST charged would be RM15.00 (10%) and RM7.50 (5%). This would produce a grand total of RM172.50, which would in the end be incurred by the buyer, which maybe a husband who is spending his family, or perhaps a group of friends who share to pay the bill.
I think this is ok because this will only happen once in a while, usually at the end of the month for the middle & lower class, when salary is in. it may very well be a one off thing once a month. Paying additional RM22.50 would not impact to the rest of the costs incurred for the entire month onwards.
Now, let’s ponder upon a layman’s example on GST. We all drink, eat, travel, make purchases and buy petrol everyday. In comparison to the SST example, we are now subjected to a 4% GST on the petrol we purchase, the roti canai and nasi lemak we eat for breakfast, the nasi gorem ayam we have for lunch, the tarik after work, and the weekly marketing we do at pasar malam and markets for the household.
Let’s do the math to find out if GST is in fact lower than SST. We’ll base it on a typical daily life of a middle class Malaysian.
Petrol – RM30.00 (with GST – for the same amount, it will be RM30.00 + 4% = RM31.20)
Breakfast – RM3.50 (with GST it will be RM3.50 + 4% = RM3.64)
Lunch – RM5.00 (with GST it will be RM5.00 + 4% = RM5.25)
After work – let’s skip the tarik for argument’s sake
Weekly Marketing – RM100.00 (with GST it will be RM100.00 + 4% = RM104.00)
Now, if we add up the expenses above, the total without GST will be RM138.50. With the GST, the amount is RM144.09. The difference is RM5.59, very like, per day. So, on a monthly basis, the layman from the middle class would be subjected to an approximate hike to RM167.70 (just daily routine expenses in comparison to RM138.50). But of course we don’t purchase RM30.00 of petrol everyday, and the pasar malam and market visit happen once a week.
** Note – the expenses above are just daily routine expenses. Other purchases will inevitably happen and the payments for bills, rents, and other Goods and Services Tax shall be left to rest for this example’s sake. You’ll understand why in a bit.
Besides, the GST, for a petroleum producing country, the fuel price should be made cheaper than countries that import fuel, much cheaper.
With the GST in hand, we should also not forget that not all sectors and industry practice a steady, guaranteed salary increment annually. So what happens to the middle and lower class Malaysian when every thing that is needed, purchased and consumed increases in price when the salary is still the same?
Basically, i have just been introduced to this term GST. I’m not really sure of all the advantages and disadvantages this new implementation brings to the table but i know that although GST is being implemented worldwide, the government should be concerned on the issue whether we, the citizens; some of which who are categorized under the middle class and lower class are financially prepared to encounter this situation. Personally speaking, a 4% increase in everything is pointless. Based on what Muhammad Irfan Indrakunavan said, the logic is completely there. Why bother changing the taxing system when the percentage is still at a low 4%? SST is less costly as compared to GST. Until the citizens are financially prepared for this implementation, i suggest that the government should reconsider this implementation.
Essential food and services will be exempted from the proposed Goods and Services Tax (GST).
Among exempted items are rice, vegetables, cooking essentials like sugar, salt and oil, seafood, meat, electricity for domestic users (first 200 units), domestic water usage, services and goods meant for export and international services.
So your teh tarik, roti canai etc are not subject to GST.
If GST is implaced, I think I would Sell all my Goods in Term Cash Only. I dont want my bad debts to accumulate becos no body wants to pay tax first on behalf of customers who may not pay you in the end. IF GST COMES, I WILL SELL CASH ONLY. NO MORE CREDIT ALLOWED. I HOPE ALL MALAYSIAN WILL FOLLOW SUIT AND THE GOVT. SHOULD ALSO APPROVE LAWS THAT FORBID BUYING GOODS ON CREDIT. THAT SHOULD BE FAIR TO ALL BUSINESSMAN IN MALAYSIA.
There may be cheaper Restaurants Meals and Cheaper Hotels F&B Bills due to the reduction in tax rates from 10% ++ to 4%++. (Good News).
There will be dearer goods and services all round for lower income groups who frequent eating shops, stalls and shops that sell retail goods. (Maybe all these low revenue shops may be exempted like S’pore). (Good News also).
There will more people paying taxs directly after the implementation as all business entities no matter big or small are mandatory required to be registered. All these entities have to produce a monthly or bi-monthly sales to the Govt. No body can escape unless some authorities are corrupted when they go around checking licences.
There will be no exemptions given to any business entities of any kinds. Previously, many entities were exempted from submitting sales & services tax due to the ambiguity of interpreting the Sales Tax Goods & Services which were very confusing. Even Customs themselves are unsure most of the times what goods are taxable or not. If you asked them, all goods and services are taxable. If we look at the Tariff Laws, many goods are exempted to avoid people from paying double taxation due to one sided sales tax laws. Now, GST includes input & output taxes. These two will offset each other in order to make a balanced payment to the Govt.
Summary – Govt must do something to protect Malaysian Businesses by implementing Cash Basis Business Transaction only. All credit terms must be referred to the banks for borrowings instead of getting credit terms from the suppliers of goods. All goods purchased on credit must be mandatory through bankers. Or else, it is very unfair to all business entities because they all are required to pay tax on cash basis whereas their business transactions are done on Credit basis. Govt. must sort this out before really implementing GST. Very bad if business entities have to fork out cash to pay the govt. while their money is yet to be collected. Many become bad debts. Many will be bankrupted if the govt. don’t force the people to use Cash Transaction Basis Businesses.
Another thing very important is the Corporation Tax Rate and Individual Tax Rate must also be reduced accordingly since govt. are collecting more money after implementing GST. It is also very unfair to tax so high agst corporate and high income individuals. Warmest Regards
My opinion: i hope GST will be implemented as well. why country like singapore and indonesia already implemented early than us??..we should look forward if we want to be high income country soon. for my opinion the if GST implemented, Malaysia will be the first country that has low rates compare to indonesia 10% and singapore 7%. if the rates just 4% our tax will decrease and my opinion that is correct ways to implement GST soon. for importer side, there lot of advantages, such as the tax paid can be claimed (tax return) if the product out of date and cannot be sell cause of demand..TQ
Actually what are the things / items that subject to GST ?