A Personal Finance Blog for Malaysian: How much do you know about GST (Goods and Service Tax)?

Thursday, October 28, 2010

How much do you know about GST (Goods and Service Tax)?

What is GST?
  • GST is a broad based consumption tax, which is imposed on goods and services that are taxable supplies. This is tax that is borne by the end consumer, i..e the Raykat and will be fully disclosed in the invoice.
Is GST a better tax system compared to the existing Sales & Service Tax?
  • Since GST is only imposed on value added at each stage, it reduces the burden of "hidden taxes/cascading effect" i.e. no "tax on tax". (hence also known as Value Added Tax in some countries)
  • It is a flexible tax system that allows adjustments to be made when required.
Does it impact me (as a consumer)?
  • Certain basic items or bare necessities will be zero rated (i.e. no tax) to relieve the burden of the rakyat.
  • End consumer would not be entitled a a refund as it is the final stage of consumption.

Will there be an increase in inflation rate as well?
  • A Price Control and Anti-Profiteering Act will be introduced to monitor pricing of goods and services after the implementation of GST to ensure that there are no deliberate "price hikes" to benefit from increased margins.
  • Experience from other countries has shown that there may be slight spikes in inflation rate when GST is first introduced although this is only in the short term
 Source : BDO (www.BDO.my)