The Goods and Services Tax (GST) is set to replace the existing sales tax and service tax. The main difference between the taxes is that the GST is a multi-stage tax while sales tax and service tax is a single stage tax. GST's main advantage is that it is more efficient as it will be collected from the very first transaction to the consumer, and only value added activities will be taxed. Because of this, the incidence of tax evasion will be reduced significantly and more revenue will be able to be repatriated to the government.
GST Implementation Rate 4% or 5% (Value in RM million)
| |
Year 1 |
Year 2 |
Total |
| RATE |
4% |
5% |
4% |
5% |
4% |
5% |
| GST |
15,000 |
18,750 |
16,720 |
20,910 |
31,720 |
39,660 |
| Additional Revenue for Enhanced Compliance |
2,070 |
570 |
5,159 |
5,159 |
7,229 |
5,729 |
| Total Revenue |
17,070 |
19,320 |
21,879 |
26,069 |
38,949 |
45,389 |
| Removal of Sales Tax & Service Tax |
14,750 |
14,750 |
15,750 |
15,750 |
30,500 |
30,500 |
| Administration Cost |
126 |
126 |
85 |
85 |
211 |
211 |
| Sales Tax Refund |
320 |
320 |
- |
- |
320 |
320 |
| Incentive Packages (one-off) |
1,650 |
1,650 |
- |
- |
1,650 |
1,650 |
| Reduction in Corporate and Personal Tax Rate |
- |
- |
- |
3,000 |
- |
3,000 |
| NET ADDITIONAL REVENUE |
224 |
*2,474 |
6,044 |
*7,234 |
6,268 |
*9,698 |
*Slowly reducing reliance on petroleum revenue
-
With GST @ 4% all Malaysian, aged 21 years and above will be given a one –off payment of RM100. SMEs be given accounting software
-
Recommendation to reduce corporate and personal income tax rate with GST @4% is not feasible as the measures will result in negative revenue
-
20 categories of supplies will be zero-rated, e.g. food stuff – rice & paddy, sugar, salt etc while 6 categories will be exempted, e.g. domestic passenger transportation
Examples of estimated price change with implementation of GST at 4%:
| |
Estimated Price Change |
If The Price Was: |
The Change Would Be: |
|
% |
RM |
RM |
| Peanut butter (340gm bot) |
-0.4% |
8.26 |
-0.03 |
| Hen's eggs grade B (10 units) |
-0.1% |
3.23 |
0.00 |
| Pullet (chicken)(kg) |
-0.1% |
7.18 |
-0.01 |
| Fresh fish - ikan kembong (kg) |
-0.3% |
9.20 |
-0.02 |
| Sawi (kg) |
-0.3% |
4.41 |
-0.01 |
| Bananas (kg) |
3.6% |
2.78 |
0.10 |
| Chocolate (45g bar) |
-4.5% |
2.49 |
-0.11 |
| Baju kurung, ready made (pair) |
-2.8% |
53.09 |
-1.48 |
| White rice, chicken & veg (ea) |
1.1% |
4.08 |
0.05 |
Revision of Income Tax
- With the reduction of 1% rate from corporate income tax which is currently at 25% to 24%, an estimated revenue loss to the Government is projected to be at RM2 billion for Year 2
- Revision of new personal income tax band is estimated to also reduce Government revenue in Year 2 by RM1 billion
2012/01/11