GST is a broad based consumption tax covering all sectors of the economy i.e all goods and services made in Malaysia including imports except specific goods and services which are categorized under zero rated supply and exempt supply orders as determined by the Minister of Finance.
What benefits do businesses get from GST?'
- GST paid on inputs is claimable
- Exports are zero rated
- There is no matching of input tax and output tax
- The existence of special schemes to alleviate cash flow.
The GST Malaysia Concept & Fundamental
How does GST works?
GST is a tax charged on the supply (including sales) of goods and services made in Malaysia and on the importation of goods and services into Malaysia. Even though GST is charged on the sales price of the goods or services, the amount to be remitted to the Government is only on the value added to the goods or services at each level of the distribution/supply chain.
The value added is the value that a producer (whether a manufacturer or distributor, etc) adds to its raw material or purchases before selling the new or improved product or service.
See the illustration below for Input and Output
GST Malaysia– Advantages
- Prices of Malaysia exports will become more competitive on the global stage as no GST is imposed on exported goods and services, while GST incurred on inputs can be recovered along the supplies chain. This will strengthen our export industry, helping the country progress even further.
- GST is a transparent Tax and also reduce numbers of indirect taxes. With GST implemented a business premises can show the tax applied in the sales invoice. Customer will know exactly how much tax they are paying on the product they bought or services they consumed.
- Doing Business now will be easier and more comfortable as various hidden taxation will not be present and most important is your business will increase the global competitiveness.
- GST can also help to diversification of income sources for Government other than income tax and petroleum tax.
- GST eliminates double taxation under SST. Consumers will pay fairer prices for most goods and services compared to SST and with a greater transparency.
Three types of supplies listed under GST;
- Standard rated supplies are taxable supplies of goods and services which are subject to a positive rate.
- Zero rated supplies are taxable supplies which are subject to a zero rate that is not liable to GST at the output or input stage.
- Exempt supplies are non-taxable supplies which are not subject to GST at the output stage that is, when supplied to the consumer. However, the GST paid on input by the businesses cannot be claimed as tax credit.