GST in Malaysia... Around the Corner?

The Malaysian Deputy Finance Minister Dato' Donald Lim Siang Chai has recently told the press that the government is expected to gradually implement Goods and Services Tax (GST) by end of 2012, and followed by the full implementation in 2013.

Hopefully Dato' Donald's comment is the real indication of the implementation date of GST in Malaysia. The government has been discussing GST for quite some years - the Royal Malaysian Customs even set up a GST dedicated website to educate public on GST. Again, the 2012 Budget did not mention on the GST implementation - perhaps this may not be a good time for the Barisan Nasional government as the general election is around the corner.

Different from the current single stage sales tax and service tax, GST is a multi-staged consumption tax that covers most supplies and goods. Since the GST implementation is once delayed, those corporates which are not ready yet should take this opportunity to revamp their systems (including their accounting systems); otherwise, the last minute job is always painful nightmare. Hopefully, by implementing GST, the personal tax and corporate tax is expected to reduce significantly, in order to increase Malaysia business competitiveness in this region - and increase the tax revenue! (the country's budget has been running in deficit for so many years...). Of course, I believe some living essential goods (such as rice, sugar, oil etc.) should be exempted from GST, otherwise will increase rakyat's burden (especially the lower-income families).

Similarly, the takaful operators in Malaysia should also enhance their policy admin systems to cater for withholding tax implementation, which affects the surplus sharing / mudharabah payments and profit declaration for Participant Account (PA) / traditional Participant Investment Fund (PIF).

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