Introduction

What is GST?
Good Service Tax (GST) is the consumption tax being charged on goods and services
on all levels of business. The tax is charged upon consumer when they spend for the
goods and services. GST will replace the Sales Tax and Service Tax. GST is meant to
make the taxing system of Malaysia to be more efficient, effective, transparent and
business friendly.
Malaysia is not the first country to introduce GST, it was introduced way back in the 50s
starting with France. Nowadays, over 160 country have implemented GST. In ASEAN,
only Malaysia, Myanmar and Brunei have not yet implemented it into their taxing
system.
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As the Budget 2014 (tabled on the 25th of October 2013) were made, Malaysians
waited anxiously whether the government will finally introduce a Goods and Services
Tax (GST) in Malaysia.
Advantages and importance of GST
As for in depth explanation of GST it is a consumption tax based on the value-added
concept that will be imposed on goods and services at every production and distribution
stage in the supply chain which also include importation of goods and services. GST will
be implemented in Malaysia starting from 1st April 2015 and the fixed rate is 6% to
replace 10% sales tax and 6% service tax. GST will have exemption on some of basic
foodstuff, piped water, public transportation services, residential properties, agricultural
land, education and health services.

1
http://www.gstmalaysia.co/what-is-gst-malaysia/4/
The advantages of GST implementations are, it will help Malaysia to overcome some of
the weaknesses in the present consumption tax system, for example the double tax. To
build up on the advantages of GST it also devoid leakage of revenue from transfer
pricing, improve tax compliance, reduce cost of doing business, reduce bureaucracy
and help the government to reduce the income tax and corporate tax (BERNAMA,
2014).
The government of the day must also implement GST in Malaysia in order to enhance
Malaysia capabilities and transparency of tax administration and management plus it is
part of the governments tax reformation program. Despite of all the importance and
advantages that government could get, Malaysians will also get benefits from it. With
implementation of GST, exports of goods and services are not subject to GST in order
to help local industry to be more competitive in the international market and on the
same time can help to boost Malaysia manufacturing sector.
Various benefits that GST can offer to consumers and businesses:
Improved Standard of Living
Lower Cost of Doing Business
Nation-Building
Fairness and Equality
Enhanced Delivery System
Increase Global Competitiveness
Enhanced Compliance
Reduces Red Tape
Fair Pricing to Consumers
Greater Transparency
Comparative with 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.
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To further encourage international business, exports of goods and services are not
subject to GST (subject to tax at zero-rate).The government is very clear about this to
ensure that exports are more competitive in the international market.
GST will be imposed at every level of the supply chain; the tax element does not
become part of the cost of the product because GST paid on the business inputs is
claimable. Therefore, it does not matter how many stages where a particular good and
service goes through the supply chain because the input tax incurred at the previous
stage is always deducted by the businesses at the next step in the supply chain.
6% introduced goodbye double tax

Based on our current taxing system the double taxing system Sales and Services Tax
(SST), the tax charges implied is at 10 percent plus 6 percent that equals to 16 percent.
Some claims that with the introduction of GST it only adds to the current SST, this is
surely not true, as the implementation of GST will abolish the current SST and implies
only 6 percent total tax charge towards consumers that spends on the mentioned goods
and services which affected by the GST.
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2
http://www.gstmalaysia.co/
3
http://www.nbc.com.my/gst/faqs-malaysia-goods-and-services-tax-gst/