Come April 2015, all Malaysian companies whose annual turnover is more than RM 500,000.00 will need to be registered as a GST registered company.
If you belong to this category of business, you will be acting as collecting agents on behalf of the Government.
Your 'duty' as a GST registrant will be to collect tax from your customers and hand over the tax collected to the Government. You can offset the tax that you pay to your suppliers from the amount you collected from your customers, and only remit the net amount to the Government.
This seemingly easy tax collection process poses a lot of challenges to the small and medium sized companies in Malaysia. If you fall into the 500k turnover category, it is best that you prepare early for the eventual implementation of Malaysian GST.
Some of challenges facing Malaysian SME's
1. Understanding GST
2. Evaluate how GST will impact every aspect of the business
3. Have a clear business process
4. Have a clear recording process
5. Insufficient internal resources for GST implementation
6. Lack of personnel with sufficient experience in GST
7. Need to invest / upgrade accounting software to capture the tax collected and paid
8. Proper documentation relating to GST
9. Need to restructure business functions within group of companies
It is best you seek the help of GST consultants to assist you if you manage a big group of companies
Dec 13, 2013
Oct 26, 2013
Reactions to GST announcement in the 2014 Malaysian Budget
Here are some of the comments regarding the announcement of GST in Malaysia.
By pushing forward with the GST, the government would reinforce investor confidence but burden the people in the long run.
The GST would require an input and output of tax to be enforced at every level of the supply chain, and is a tedious and complex task requiring stricter enforcement
GST targets a bigger group but poor hit most
- say economists from the Socio-economic and Environment Research Institute (SERI).
The decision to finally introduce the Goods and Services Tax (GST) is a regressive move that would largely hurt poor and debt-ridden Malaysians. The introduction of consumption tax of 6% effective April 1, 2015 would in fact do more harm than good in the long run. The poor “tend to have lower savings as most of their expenditures are for necessities”.By pushing forward with the GST, the government would reinforce investor confidence but burden the people in the long run.
The Government need to ensure that it can enforce the GST effectively.
- say Institut Rakyat economist
The committee tasked to oversee the implementation of GST must have the teeth to enforce the GST on traders, manufacturers so as to curb inflation.The GST would require an input and output of tax to be enforced at every level of the supply chain, and is a tedious and complex task requiring stricter enforcement
Oct 25, 2013
GST to be introduced in Malaysia
It's confirmed. The Malaysian PM has just announced that GST will be implemented in Malaysia effective from April 1, 2015, at the rate of 6%.
In line with that, expenses related to purchase of accounting software and training in preparation for GST will be entitled to double deduction.
In line with that, expenses related to purchase of accounting software and training in preparation for GST will be entitled to double deduction.
Oct 17, 2013
GST Implementation is a must
There are many parties who are urging the Malaysian Government of the day to announce the introduction of GST in the coming 2014 budget to be held on October 25, 2013.
Arguments supportive of the GST:
1. Accounting firm PWC suggests that the GST rate to be imposed at 6%. The Government can expect to rake in an annual revenue of around RM32 billion at the suggested 6% GST rate. If the GST was to be imposed at 4% per cent, it would be 'revenue neutral' and there was no point in imposing it. (see report here)
The increase in revenue collection is to give the government some degree of flexibility in terms of fiscal management. More importantly, it will not cause a further downgrade of the country's Fitch's rating.
2. The Secretary-General of Treasury says that "GST implementation a must" . There is an urgent need to tackle the country’s fiscal deficit as Malaysia’s current account shrank to RM2.6 bil in the second quarter of 2013. Full report here
The country's public debt level is so close to the statutory limit of 55 per cent of gross domestic product (GDP). The country needs money to fuel the 6.5 per cent growth that is needed to become a rich nation by 2020.
3. With the introduction of GST, it will mean that the Country will be able to generate a more stable source of income, while reducing reliance on direct taxes (Income tax) and petroleum revenues.
Just to recap, GST is a form of tax collection that is based on consumption. It is supposed to be a fairer tax system, as it will help the government collect their dues from those who have yet to declare and file their income tax returns. What the income tax does not capture, the GST will capture.
4. What is wrong with the goods and services tax (GST) when more than three-quarters of the world's countries are implementing it? They can't be all wrong. (Read more here )
Arguments against GST
There are also many parties who are opposing the introduction of GST. The opposing parties said that now is not the time to introduce GST because "it will heavily burden the rakyat and take a toll on the rakyat" (quote extracted from here). There are parties that will try to stop GST from being passed in Parliament.
Also, the opposing argument is for the government to look into cost controls, instead of just focusing on broadening its income base by implementing the GST
"It is important that the efficiency and effectiveness of our government organisation are enhanced and improved ... only then do I think the deficit can be reduced." Read more
Arguments supportive of the GST:
1. Accounting firm PWC suggests that the GST rate to be imposed at 6%. The Government can expect to rake in an annual revenue of around RM32 billion at the suggested 6% GST rate. If the GST was to be imposed at 4% per cent, it would be 'revenue neutral' and there was no point in imposing it. (see report here)
The increase in revenue collection is to give the government some degree of flexibility in terms of fiscal management. More importantly, it will not cause a further downgrade of the country's Fitch's rating.
2. The Secretary-General of Treasury says that "GST implementation a must" . There is an urgent need to tackle the country’s fiscal deficit as Malaysia’s current account shrank to RM2.6 bil in the second quarter of 2013. Full report here
The country's public debt level is so close to the statutory limit of 55 per cent of gross domestic product (GDP). The country needs money to fuel the 6.5 per cent growth that is needed to become a rich nation by 2020.
3. With the introduction of GST, it will mean that the Country will be able to generate a more stable source of income, while reducing reliance on direct taxes (Income tax) and petroleum revenues.
Just to recap, GST is a form of tax collection that is based on consumption. It is supposed to be a fairer tax system, as it will help the government collect their dues from those who have yet to declare and file their income tax returns. What the income tax does not capture, the GST will capture.
4. What is wrong with the goods and services tax (GST) when more than three-quarters of the world's countries are implementing it? They can't be all wrong. (Read more here )
Arguments against GST
There are also many parties who are opposing the introduction of GST. The opposing parties said that now is not the time to introduce GST because "it will heavily burden the rakyat and take a toll on the rakyat" (quote extracted from here). There are parties that will try to stop GST from being passed in Parliament.
Also, the opposing argument is for the government to look into cost controls, instead of just focusing on broadening its income base by implementing the GST
"It is important that the efficiency and effectiveness of our government organisation are enhanced and improved ... only then do I think the deficit can be reduced." Read more
Jun 3, 2013
Malaysian Government will not implement GST in the near term
So, the Goods and Services Tax (GST) will not be implemented yet in the near term, at least not until some issues are being tackled, said the new Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah. Amongst others, the Government is taking a holistic view of the GST implementation, and will address issues such as :
1. studying the GST implications and rate to be imposed
2. engaging with politicians, the private sector and the general public before arriving at a decision
3. relooking the earlier study by taking a holistic view of it
4. see the GST from the point of prosperity of the people (not just the point of view of the Government's revenue generation)
5. looking at providing some assistance to the people, in tandem with the government's intention to reduce corporate and personal tax
In terms of the GST rate, the government is looking into it in terms of its benefit to the government, the private sector and the general public.
In other words, a review is being made on the GST implementation, and no timeline is set yet for the implementation of the GST.
More time is needed to study the GST implementation
Source :
Bernama report titled "Government Will Not Implement GST In The Near Term"
Dated : May 30, 2013
1. studying the GST implications and rate to be imposed
2. engaging with politicians, the private sector and the general public before arriving at a decision
3. relooking the earlier study by taking a holistic view of it
4. see the GST from the point of prosperity of the people (not just the point of view of the Government's revenue generation)
5. looking at providing some assistance to the people, in tandem with the government's intention to reduce corporate and personal tax
In terms of the GST rate, the government is looking into it in terms of its benefit to the government, the private sector and the general public.
In other words, a review is being made on the GST implementation, and no timeline is set yet for the implementation of the GST.
More time is needed to study the GST implementation
Source :
Bernama report titled "Government Will Not Implement GST In The Near Term"
Dated : May 30, 2013
May 18, 2013
Who will be affected should GST be implemented in Malaysia
The Malaysian Government is quite set to introduce introduce the Goods and Services Tax GST in
Malaysia. While the exact date has not being given, it is now expected in
2014. Whichever date it is, the Government has mentioned that they will give ample time between 18 to 24
months for the businesses and industries to prepare themselves for the
implementation of GST
Who are the people who will be affected by GST implementation
1. All consumers (individuals and companies) in Malaysia who buys taxable goods will be paying for the GST. This cover practically every item sold in Malaysia except for the utilities and necessities.
2. Companies who manufacture and sell taxable goods will collect the GST on behalf of the government, and remit the tax when due
About 122,000 companies will be affected by the eventual implementation of the Goods and Services Tax (GST).
Within these companies, it will affect everything from human resources policies, and systems and processes relating to stock management and invoicing. The introduction of GST will involve more than just the accounts department.
How can companies prepare for GST?
The GST amount can be large for some businesses. Company owners must make sure their business managers have a good grasp of the mechanics of GST to enable them to develop . strategies to tackle the implementation issues. Proper planning and execution is necessary to ensure that the company's profitability, competitiveness, costing and cash flow will not be unduly affected by the implementation of GST.
Some areas that companies need to take note are :
- Contracts signed from now on would need to include a provision to review for post GST implementation.
- Understand the scope of taxation under GST environment. If your company is exempted from GST registration (as it falls below the income threshold) you might want to weigh the cost and benefits of applying for voluntary GST registration
- Whether it is more beneficial to register for GST registration as a single entity or as a group, and what paperwork is required
- Find out what are the grey areas in computing the taxable and non taxable component of a product, and resolve with the relevant authorities to get the most effective method to apportion the cost
- What are the conditions for preferential treatment of GST and how you can qualify for it
- Understand clearly when the tax is due for submission so that you can plan your cashflow well.
- For certain industries, such as the construction industries, it is important to find out how the treatment of income recognition and accrual of expenses will affect the timing of GST due and payable.
The body that is driving the implementation of GST is the Taxation Review Panel set up
by the Ministry of Finance. You can refer to the Ministry officials if you are in doubt.
One important area that you can start looking into is to invest in an accounting system that is GST ready.
Malaysia GST - money spinner for the government
Now that the 13th Malaysian General Election (GE) is finally over on May 5, 2013, talks are resurfacing about the implementation of GST in Malaysia.
Recently the Minister in the Prime Minister's Department, Idris Jala, spoke at the forum "GE13 - What it means for business?" and mentioned that with the introduction of the GST, a new taxation mechanism for Malaysian, it "can guarantee additional revenue of RM20 billion to RM27 billion, at maturity." The term 'at maturity' refers to the period when "every Malaysians starts to contribute towards the GST ".
Just to put things in perspective, the Malaysian Government debt for year 2012 stands at RM 543 billion, which is equivalent to 53% of the Gross Domestic Product GDP. With the introduction of GST, the Malaysian Government will be able to reduce the debt level, and also provide extra funds for the government to spend on the well-being of Malaysians
Source : The article above is extracted from a report entitled GST Implementation To Add Up To RM27 Billion To Malaysia's Income, which is published here (May 17, 2013)
Recently the Minister in the Prime Minister's Department, Idris Jala, spoke at the forum "GE13 - What it means for business?" and mentioned that with the introduction of the GST, a new taxation mechanism for Malaysian, it "can guarantee additional revenue of RM20 billion to RM27 billion, at maturity." The term 'at maturity' refers to the period when "every Malaysians starts to contribute towards the GST ".
Just to put things in perspective, the Malaysian Government debt for year 2012 stands at RM 543 billion, which is equivalent to 53% of the Gross Domestic Product GDP. With the introduction of GST, the Malaysian Government will be able to reduce the debt level, and also provide extra funds for the government to spend on the well-being of Malaysians
Source : The article above is extracted from a report entitled GST Implementation To Add Up To RM27 Billion To Malaysia's Income, which is published here (May 17, 2013)
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