Nov 022010

In the recent Malaysia annual Budget 2011, the Government has postponed the implementation of GST (Goods and Services Tax) until the GST concept is well received by people in Malaysia. For your info, GST Malaysia was first mentioned in the Budget 2005 and had its first parliamentary reading in 2009.

no more gst malaysia

Before this, many people are still not having confidence on GST which plans to be launch in year 2011 and we have write a few posts about GST Malaysia to give some basic GST concept to all readers. You may read GST Malaysia – Goods and Services Tax if you want to know more about GST.

Government Services Tax Increases from 5 % to 6 % starting January, 2011

While we are relief that Government has decided to postpone the implementation of GST, Malaysia Government has agreed to increase Government Services tax from 5 percent to 6 percent effective on 1 Jan, 2011. The main reason to increase the Services tax is to generate extra tax revenue for country.

Although this extra 1% services tax increment seems not too much compare to 4% GST which has been postponed, but it still causing burden to poor people in Malaysia. However, the 1% rate will not apply to credit cards that have been charged RM 50 annually on principal cards and RM 25 for supplementary cards. Therefore, you are still paying the same services tax on credit cards.

What if GST implements in Year 2011 as per scheduled?

I know this will not happen at least in 2011 but who knows Government may decide to continue GST in year 2012?

If GST really implements in Malaysia, I personally think that Government should lower the corporate and individual income taxes. It will help country to achieve a sustainable and strong economic growth and minimize the country’s dependent on taxes from the oil and gas sector. Besides that, the Government should diligently educate people by showing some realistic comparison and results between current tax structure and GST structure instead of giving some theory concept only.

Will GST Malaysia Implements in the future?

My answer is yes and definitely. It is because GST is world tax concept and has been adopted in many countries and all Asean countries except for Malaysia, Brunei, and Myanmar. Therefore, be prepared to accept GST concept and if Government can implement GST successfully and effectively, I believe GST will provide more stable revenue for the Government and reducing the tax burden of people in Malaysia.

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