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GST in Malaysia?

Goods and Service tax (GST) was initially scheduled to be introduced in Malaysia after the third quarter of 2011, however owing to widespread protests and the general mindset of Malaysian people towards the new revenue regime, Malaysian Government decided to stall the implementation of GST and since then the government, who are seeking additional revenues to compensate their budget deficiencies and over dependency on state owned oil firms, have been looking for the correct time to begin taxing GST, as a value added tax from its citizens.

GST is supposed to replace the existing sale tax that is charged between 5% and 10% to a value of 6%, however, whether it will affect the other taxes like income tax, is still uncertain. Still the government of Malaysia is far from done with its project of GST implementation and are currently concentrating more on GST awareness programs to ensure that people realise the importance and benefits of the planned tax system. Though government have been trying hard to make their awareness programs as far-reaching and as informative as possible, getting public acceptance and educating the people about GST will be far from, a walk in the park, especially given that people’s mindset about the proposed tax system is not very positive.

Another very important issue that needs to be solved before going ahead with the plan of GST is to make sure that the overall prices of the commodities are adjusted appropriately where the Price Control and the Anti-Profiteering Act 2010 are enforced in a proper manner. Given the current hurdles that it is facing and the fact that corporate companies in Malaysia are currently not at all prepared to pay the additional value added tax, renowned economists in country believe that the enforcement of GST may not see the light of day before the second quarter of 2015.

Experts believe that though initially people may find it tough to cope up with the new prices of products due to GST, but in the longer run it will prove to be effective and will provide government with adequate sum to fill in their budget vacancies. What people need to understand is that the effect of implementing GST will not be the same on every product and may vary from one commodity to another.

Companies will need to make necessary adjustment to their budgets and make changes to the price-tag of their products in order to accommodate the additional cost due to the proposed GST, which might take time, therefore there have been widespread calls for starting GST at lower rates and then gradually increasing them so that both companies and the people get sufficient time to plan accordingly. Whatever decisions the government takes, one thing is for sure, sooner or later, GST will surely make its entrance into the Malaysian economy.

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