Dec 062009

On 24 November 2009, Malaysia Prime Minister, Dato’ Sri Mohd Najib Tun Abdul Razak had announced that a bill relating to the proposed introduction of GST – Goods and Services Tax will be tabled at the end of the current Parliament Sitting. For your info, Goods and Services Tax will be implemented starting 3rd quarter of year 2011. Therefore, all Malaysian have to prepare yourself to pay 4% extra for everything you buy or service. :(

What is GST?
GST, a multi-stage consumption tax, is based on consumption rather than earnings and can be charged on virtually all supplies of goods and services. The proposed implementation of GST will replace the current Malaysian service tax and sales tax.

Broadly, GST works by offsetting GST paid on purchases (input tax) against GST due on sales or supplies made (output tax). This is referred to as the credit offset mechanism. The multi tier stages of tax helps to ensure that GST paid by businesses for purchases does not end up being a permanent cost. However, the consumer ultimately bears the burden of the tax.

How GST affects businesses?
Where GST is implemented, the taxpayer must be registered with the Royal Malaysian Customs once the taxpayer achieves a certain prescribed annual sales turnover. The registered taxpayer would also be required to submit periodic GST returns.  If the output tax is greater than the input tax, the taxpayer will have to pay the excess.  Conversely, if the input tax is greater than the output tax, the taxpayer could seek a refund from the Royal Malaysian Customs.

In addition to the compliance requirements above, taxpayers would be required to undertake additional administrative work which includes, amongst others, keeping track and recording all input taxes paid, undertaking reconciliations and filing of GST returns.

How does GST work?
Conceptually, GST is imposed on the value added to goods or services by each separate processor in the production and distribution chain. This can be seen in the simple illustration below.


What do YOU need to do?
At this point in time, the issues in relation to GST that businesses should consider include:

• The additional record keeping requirements that GST will impose and your IT systems ability to handle this.

• The likely GST treatment for your products / services and the impact on pricing strategies.

• The impact of GST on long term contracts.

• The GST cost of outsourcing versus internal supply.

• Timing of purchases pre and post the implementation of GST.

• Impact of GST on benefits-in-kind to staff and provision of samples and gifts.

• The need to educate your staff and customers on GST issues and compliance.


What do you think about GST – Goods and Services Tax? Should it be implemented in our country? Are Malaysian ready to pay for the extra tax? What say you?

  21 Responses to “GST – Malaysia Goods and Services Tax in Year 2011”

  1. I am not from Malaysia but I believe that anything that would make the prices of services go up is a bad thing.
    .-= Diabetis´s last blog ..Diabetic can easily felt hunger =-.

  2. Hello there, I’m not from Malaysia but it’s interesting to know about other countries services. :)
    .-= Benjamincip´s last blog ..Lifetime Membership Access Contest =-.

  3. @Benjamincip: Hi, Ben. Great to have you here. As you know, I hate services tax especially in the period of economic downturn. :)

  4. @Diabetis: Thanks for your concern. You’re right, it will cause the price of everything go up and consumers have to suffer the outcome.

  5. I don’t care much about it (Should I say can’t do anything). Just wish that our government will use that tax money wisely.
    .-= Jayce´s last blog ..SpeedBit Video Accelerator Review =-.

  6. @Jayce: I hope in the next election, all Malaysian will use their wisdom to vote for the right government. :)

  7. hello there…
    this statements really interest me
    it is because when from the start the prices were very high
    in the end, definitely final consumer suffer seriously money problems
    by the way, who write this statement?
    i like :)

  8. actually GST hav 4categories.(standard-rated, zero-rated, exempt and out of scope)
    our basic necessities/groceries r in d zero-rated category.tat means 0% subject to GTS.we dont need 2 pay more for it.
    sumore,our mass domestic transportation services are in the exempt category. again, we dont need 2 pay xtra money 4it.
    GST itself is charge for those who r affort miligate those r economic vulnerable.
    i like 2 numerical example helps me 2understand more.thx. =)

  9. @HYee: Thanks for the extra info sharing with us.

  10. Hello admin. Nice info there. Yup.. When price of the goodies rises very high, the price will never go down again. Hope this GST will be removed from our government plan. I never see this idea will help our people.

  11. @Shaiful: Nice to meet you. At the moment I also do not see GST will help us, hoping when it implements, everyone especially the poor one will get better benefits from GST. Let’s wait and see. :)

  12. Hi all,
    I just come back from the GST Seminar… HYee is right. Whatever system we choose it always come with Pros and Cons. And its human nature like to concern more on the -tive rather than +tive, in almost situation.

    There will be some goods and services increase and some will be decrease. As long we do our part as consumer and also the manufacturers. The basic need shoud be cheaper.

    Refer to above example, the manufacturer, the cost should be calculate as the same from beginning cause the profit and other cost will be put under ‘Value Added’. And it suppose not be priced to high after add the GST…as manufacturer (etc) can claim the GST being charges to them from the supplier…(Example above: the manufacturer will only pay RM2 to goverment as they will claim the RM4, the GST been charge to them by Supplier). Not like before, the Manufacturer usually will calculate RM104 as the cost price due to they can’t claim back the RM4….and as in going the be same thing happen to the retailer or reseller and so on. The end, the public get the price so high.

    And for long term, the it will make our country more prosper and the benefits goes back to the public…As long everyone being honest….well human, its hard to understand.

    If you talk about the goverment, please be more rasional…Its not ‘What type of party?’ but more on ‘Who is the person?’. Basically, all based on self-interest.

    Even you or me….

  13. @Adruz: Thanks for great info and comment. I hope people will be more understand about GST-Goods and Services Tax concept after reading your comment. :)

  14. in this 7/8/2010 our company hv invite custom people having a talk about latest news on “GST” this will help us more understanding on GST and how to plan our financing in next year.

  15. any 1 interest in this pls contact me 012-6189928

  16. GST good in my view. government should impose GST tax on certain goods, expensive items, but affordable. such as LCD TVs, air conditioners, DVD players and others. those who can afford these products are necessarily high-income , so no problem for them. for who cannot afford to buy, they have option to make a choices.

    • @Ahmad: I agree with you, Government should only impose GST tax on expensive items which only involve rich people. Poor people should be given some sort of incentives or exceptions.

  17. I heard that the GST has been postponed again. Until when I am not sure.

    • @Harry: You’re right. GST is postponed by the Government to give more time to people to understand the concept and advantages. I believe it will implement as soon as Government think that people are ready for it.

  18. lee, u r the open minded person…. :) good2… if all malasian like u, malaysian will growth kindly … now, jz to review the government justice to manage the profit..hope all in good condition..

    • @anwar: We hope Malaysia will grow strong and all Malaysians will live a happy and better life. Let’s pray for Malaysia. :)

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